WALL 

STREET 

POINT 


VIEW 


HENKT 
CLEAVS 


J 


THE 
WALL      STREET 


POINT     OF     VIEW 


BY 


HENRY   CLEWS 


AUTHOR    OF     "  TWENTY-EIGHT    YEARS    IN    WALL    STREET 


SILVER,    BURDETT   AND    COMPANY 

NEW  YORK  BOSTON  CHICAGO 


COPYRIGHT,  1900, 
BY  SILVER,  BURDETT  AND  COMPANY. 


GSMgmt 
Library 


£  5-1  uj 
CONTENTS. 

PART   I. 

WALL  STREET  ITSELF. 
CHAPTER  I. 

PAGE 

WALL  STREET  AS  A  GAUGE  OF  BUSINESS  PROSPERITY  i 

What  it  is :  its  area,  population,  and  institutions.  —  The  differ- 
ence between  natural  and  artificial  conditions,  the  latter  being 
the  false  standard  of  judgment  by  outsiders.  —  People  decry 
Wall  Street  speculation  without  a  correct  knowledge  of  its  char- 
acter. —  "  The  Street "  is  not  a  gambler's  paradise,  but  a  place 
where  hard,  honest  work  tells.  —  It  is  a  public  benefactor,  and 
once,  at  least,  saved  the  country.  —  The  center  to  which  the 
surplus  money  of  the  world  flows  for  investment.  —  This  famous 
street  has  the  life-blood  of  railroads,  upon  which  millions  of 
people  have  been  enjoying  a  better  living  than  they  could  get 
elsewhere. 

CHAPTER   II. 

THE  STUDY  OF  THE  STOCK  MARKET 5 

The  powers  of  speculative  fascination  over  a  large  number  of 
people.  —  Bad  results  of  adopting  second-hand  opinions.  —  The 
laws  of  speculation  and  investment  must  be  studied  profoundly. 
—  Fact  and  rumor  should  be  carefully  distinguished.  —  Hard 
study  of  facts  and  real  values  generally  leads  to  sound  and  accu- 
rate conclusions.  —  It  is  also  necessary  to  study  the  circum- 
stances and  events  which  cause  real  values  to  fluctuate.  —  How 
natural  laws  eventually  regulate  values  and  reduce  inflated  ones 
to  their  true  basis. 

CHAPTER  III. 
MONEY  AND  USURY 1 1 

Various  opinions  regarding  interest  and  usury.  —  Why  should 
not  compensation  for  the  use  of  money  be  left  to  the  freedom  of 


1680972 


iv  CONTENTS. 

PACK 

contract  untrammeled  by  restrictive  laws  ?  —  Views  of  Lord 
Bacon  and  Lord  Mansfield  on  usury  and  interest.  —  The  word 
"  interest  "  not  known  in  Bacon's  time.  —  All  laws  against  usury 
capable  of  evasion.  —  Various  rates  and  the  laws  of  usury  per- 
taining to  different  states.  —  Freedom  of  contract  the  true  doc- 
trine in  money-lending  and  borrowing. 

CHAPTER  IV. 

THE  RAILROAD  PROBLEM       •; 18 

Present  status  of  railroads,  and  indispensable  reforms  in  their 
management.  —  Legislative  requirements.  —  Railroad  business 
as  a  gauge  of  prosperity.  —  Ten  millions  of  people  depending 
on  them  for  a  living.  —  Suggestions  upon  consolidation.  —  Hints 
for  the  regulation  of  directors.  —  President  Ingalls's  views  on 
the  evils  of  railroad  management. 

CHAPTER  V. 

MANAGEMENT  OF  OUR  INDUSTRIAL  ENTERPRISES     ....      26 

The  relation  of  the  financial  management  of  these  institutions 
to  their  success  or  failure.  —  They  should  be  compelled  to  make 
periodical  statements  of  their  condition  as  quasi-public  concerns. 
—  The  origin  of  corporations  and  their  beneficent  purposes.  — 
They  are  powerful  in  the  present  day,  if  properly  managed,  for 
the  production  of  wealth  and  the  promotion  of  the  best  interests 
of  society.  —  A  public  and  periodical  system  recommended  for 
the  examination  of  accounts  by  experts  trained  for  the  pur- 
pose. —  Under  proper  management,  the  whole  community 
might  share  in  the  great  advantages  which  these  industrials  are 
capable  of  conferring  on  the  public  at  large. 

CHAPTER  VI. 

CONCERNING  TRUSTS  AND  CORPORATIONS 31 

Trusts  are  transformed  into  corporations  and  doing  business 
legally.  —  How  corporations  with  large  aggregations  of  capital 
make  everything  cheaper  for  consumers  and  purchasers  gen- 
erally.—  Amazing  decline  in  prices  and  railroad  rates,  while 


CONTENTS.  V 

PAGE 

wages  are  higher  than  ever  and  the  number  of  employes  in- 
creased. —  The  power  of  consolidations  and  corporations  for 
increasing  wealth,  national  and  private,  and  for  making  every- 
body more  prosperous.  —  Interesting  confession  of  F.  B. 
Thurber,  the  ci-devant  anti-monopolist.  —  He  gives  cogent 
reasons  for  his  change  of  heart,  and  shows  the  great  benefits 
corporations  confer  upon  the  people.  —  Farmers  and  cotton- 
growers  more  prosperous  than  ever,  and  why.  —  Cooperation 
the  coming  power  in  the  competitive  struggle,  which  will  also 
solve  the  problem  of  socialism.  —  Enough  of  remedial  legisla- 
tion already  provided  to  give  relief  in  almost  any  supposable 
case. 

CHAPTER  VII. 

THE  ART  OF  MAKING  AND  SAVING  MONEY 44 

Opportunities  for  making  money  numerous.  —  How  to  em- 
brace them,  and  how  to  begin  the  work  of  accumulation.  —  It  is 
easier  to  make  than  to  save  money.  —  The  small  beginnings  of 
prominent  millionaires,  and  how  they  made  their  fortunes.  — 
Industry,  perseverance,  honesty,  and  thrift  must  be  associated 
with  the  methods  of  all  who  aspire  to  success  in  life.  —  Necessity 
has  been  the  great  stimulus  in  the  eminent  examples  here  cited. 
—  Prudence,  forethought,  and  sage  advice  required  for  successful 
investment.  —  Begin  right,  early  in  life. 

CHAPTER  VIII. 

BUSINESS  EDUCATION 50 

How  the  business  prospects  of  young  men  of  the  present 
day  compare  with  those  of  twenty-five  or  fifty  years  ago. — A 
much  better  start  in  life  possible  now  than  then,  as  proved  by 
historical  facts.  —  The  young  man  of  to-day  as  compared  with 
his  grandfather  at  the  same  age.  —  How  millionaires  of  old  were 
made,  and  how  young  men  now  want  to  become  millionaires 
by  jumping  over  the  intermediary  steps  and  omitting  the  hard 
work.  —  Certain  delusions  about  business  success  criticised,  and 
some  cordial  advice  vouchsafed.  —  Opinions  old  and  new  on 
college  and  classical  education,  and  the  value  thereof  in  a  busi- 
ness career.  —  Macaulay's  views. 


vi  CONTENTS. 

CHAPTER  IX. 

FAOV 

FALSE  MEN  AND  METHODS  ON  THE  STREET  .       .       .  59 

Modern  and  ancient  opinion  on  this  subject  compared. — 
How  it  manifests  itself  in  Wall  Street  affairs.  —  The  inherent 
capacity  to  resist  the  evil  tendency.  —  Fortunes  that  are  made 
by  degenerates  and  regenerates  contrasted. 

CHAPTER  X. 

PANICS  AND  THEIR  INDICATIONS 66 

The  causes  which  generally  give  origin  to  panics  described.  — 
How  these  great  upheavals  in  business  and  finance  may  be  par- 
tially avoided,  and  their  consequences  alleviated  when  they  do 
occur.  —  Greater  elasticity  in  the  methods  of  banking  required  to 
enable  the  banks  to  meet  emergencies. — These  institutions  have 
in  recent  years  done  well  when  not  handicapped  bylaw. — They 
should  be  permitted  to  make  more  liberal  use  of  their  reserve  to 
relieve  financial  distress.  —  How  banks  and  business  men  should 
cooperate  in  times  of  impending  crisis.  —  The  forecast  of  the 
panic  of  1893. 

PART   II. 

WALL  STREET  AND   THE  GOVERNMENT. 

CHAPTER  XI. 
WASHINGTON  DOMINATION  IN  FINANCE,  SPECULATION,  AND  BUSINESS      74 

Some  inquiry  into  its  nature.  —  Assumes  the  complexion  of  a 
centralizing  bureau  of  financial  information  with  a  censorship 
attachment. — The  attempt  of  the  political  power  to  override 
the  financial  a  failure.  —  All  financial  roads  lead  to  Wall  Street. 
—  New  York  destined  to  be  the  world's  center  of  finance. — 
Politics  cannot  rule  finance  except  on  a  very  broad  basis. — 
Some  sapient  object  lessons  from  the  Constitution  in  their  appli- 
cation to  statesmanship,  politics,  and  finance.  —  Justice  Story's 
opinions  of  the  duties  of  a  President  in  giving  information  and 
counsel  to  Congress.  —  The  immense  power  of  the  President  in 
these  matters,  and  the  requisite  qualifications  to  enable  him  to 
advise.  —  His  great  and  varied  responsibility.  — The  "  duty  of  a 
President "  is  more  than  "  executive."  —  A  nice  distinction  be- 


CONTENTS.  vii 

PAGE 

tween  advice  and  the  power  of  initiating  measures  in  Congress. 
— The  object  lesson  for  the  people  in  the  Washington  domination, 
and  its  issue. 

CHAPTER  XII. 

THE  CHIEF  MAGISTRATE 81 

Qualifications  indispensable  for  the  highest  office  in  the  land. 

—  Neither  a  towering  genius  nor  an  offensive  partisan  fit  for  the 
position.  —  The  ultimate  and  crucial  test  of  the  popularity  of  a 
President,  and  his  consequent  success,  is  the  material  prosperity 
of  the  country. —  He  has  to  bear  the  brunt  of  bad  times,  no  mat- 
ter how  able  and  good  he  may  be.  —  Failure  of  Webster,  Clay, 
and  Calhoun  to  reach  the  goal  of  their  ambition.  —  The  nation 
sensitive  on  a  President's  errors  in  finance  and  currency.  —  Parallel 
between  Jackson  and  Cleveland.  —  Origin  of  the  national  bank- 
ing system. 

CHAPTER  XIII. 

THE  CLEVELAND  ADMINISTRATION  —  FIRST  TERM  ....      92 

An  excellent  beginning  with  the  best  intentions.  —  Large 
promises,  but  small  performances.  —  Purposes  regarding  Civil 
Service  Reform.  —  The  theory  was  Jeff ersonian,  but  the  condi- 
tion was  Jacksonian. — The  famous  "Tariff  Message"  of  Mr. 
Cleveland.  —  "A  condition,  not  a  theory." — How  the  purchase 
of  a  yard  of  calico  confounds  his  theory  and  pet  arguments  in 
favor  of  free  trade.  —  Mr.  Cleveland's  free-trade  principles 
would  bestow  our  home  markets  on  foreign  manufacturers  and 
reduce  our  own  workmen  to  indigence. 

CHAPTER  XIV. 

THE  HARRISON  ADMINISTRATION 98 

Its  influence  on  some  of  the  consequences  of  the  Baring 
panic. — The  absence  of  "Jingoism"  was  a  conspicuous  feature 
of  the  Harrison  regime.  —  Harrison  as  an  orator.  —  His  Western 
trip  compared  with  the  Eastern  trip  of  Bryan.  —  His  astonishing 
familiarity  with  all  the  States  and  their  conditions,  and  his 
magnetic  power  over  audiences,  as  displayed  in  Western  cities. 

—  A  thorough  politician  and  a  far-seeing  statesman.  —  His  co- 
operation with  James  G.  Blaine  in  devising  the  wise  policy  of 
reciprocity  which  was  spoiled  by  the  Democrats. 


viii  CONTENTS. 


CHAPTER  XV. 

PAGE 

MR.  CLEVELAND'S  SECOND  ADMINISTRATION  .....     103 

How  Mr.  Cleveland  acquired  the  character  of  an  independent 
candidate.  —  Success  of  his  fiscal  policy,  especially  regarding 
the  surplus  revenue  and  the  depository  banks.  —  Making  himself 
"  solid  "  with  bankers  and  financiers.  —  How  it  was  that  he  was 
beaten  by  Harrison  in  1888,  but  vanquished  him  in  1892. — 
How  he  lost  his  popularity  by  the  irreparable  errors  of  the  two 
object  lessons. —  Remarks  on  his  sound  money  views  and  his 
indomitable  perseverance.  —  Utterly  failed  to  understand  the 
tariff  question. 


CHAPTER   XVI. 

EX-PRESIDENT  CLEVELAND  PERSONALLY  CONSIDERED     .       .       .114 

The  theory  of  his  potent  personality,  and  an  attempt  to  un- 
ravel the  secret  of  his  success  through  this  mysterious  power 
and  other  potentialities.  —  Striking  a  balance  between  his  praise- 
worthy acts  and  some  of  his  mistakes.  —  How  he  is  likely  to  be 
rated  by  the  future  historian  and  biographer.  —  His  name 
stamped  indelibly  on  the  politics  of  his  own  times.  —  His  un- 
flinching advocacy  of  sound  money.  —  He  drew  men  of  all 
shades  of  politics  after  him  and  was  independent  of  party.  — 
Why  he  drew  so  many  heterogeneous  elements.  —  Comparison 
with  Macaulay's  "  Machiavelli."  —  His  prompt  and  popular 
action  in  suppressing  the  Chicago  riots  and  causing  the  over- 
throw of  Eugene  V.  Debs.  —  His  advice  to  the  Democratic 
party. 

CHAPTER  XVII. 

SIGNIFICANCE  OF  THE  WILSON  TARIFF  LAW 123 

Intended  to  wipe  out  every  vestige  of  Republican  tariff  legis- 
lation. —  How  the  law  has  proved  a  boomerang,  and  deprived 
the  Democrats  of  a  return  to  power  for  a  long  period.  —  How 
men  accustomed  only  to  little  places  and  little  interests  cannot 
be  expected  to  deal  with  big  matters. 


CONTENTS.  ix 

CHAPTER  XVIII. 

PAGB 

A  BATCH  OF  LEGACIES 128 

Devised  and  bequeathed  to  the  Democratic  party  by  the  last 
will  and  testament  of  the  last  Democratic  Congress.  —  The  un- 
finished business  of  eight  years  of  hard  and  anxious  work  in  the 
White  House.  —  Lincoln's  views  on  the  Constitution  and  the 
tariff. 

CHAPTER  XIX. 

TARIFF  FOR  PROSPERITY  ONLY 132 

The  invaders  of  our  home  markets  repulsed.  —  Foreign  manu- 
facturers and  the  products  of  their  pauper  labor  not  in  demand. 
—  Definitions  of  revenue  tariff  and  protective  tariff.  —  The  latter 
fairly  provided  for  in  the  Dingley  Bill,  and  wool  restored  to  the 
farmers.  —  Home  markets  in  preference  to  foreign.  —  How 
McKinley  humorously  caught  the  clothier  member  for  Boston 
on  the  cheap  clothing  argument.  —  Home  capital  and  home 
labor  will  get  a  chance  for  development,  and  the  time  of  pros- 
perity has  come.  —  Practical  outcome  of  the  protection  and  free- 
trade  doctrines  considered. — The  testimony  on  this  subject  of 
two  eminent  witnesses,  James  Buchanan  and  Grover  Cleveland. 

CHAPTER  XX. 

OUR  FOREIGN  TRADE  AND  FREE  TRADE         .        .        .        .        .146 

The  immense  showing  of  our  foreign  trade  for  the  fiscal  year 
ending  June  30,  1898. — Our  balance  of  trade  far  ahead  of  that 
of  other  years  and  twice  the  amount  of  any  previous  record.  — 
This  has  been  achieved  under  a  protective  tariff  which  free- 
traders thought  was  going  to  ruin  the  country.  —  How  it  tallies 
with  the  free-trade  doctrine  of  the  Cobden  Club  and  that  of  its 
representatives  in  this  country.  —  The  immense  increase  in  the 
exports  of  our  manufactured  goods.  —  Our  wealth  increases  as 
our  imports  diminish,  and  as  our  exports  increase.  —  We  saved 
in  1 898  an  amount  of  money  greater  by  half  a  billion  of  dollars 
than  the  national  debt  at  the  close  of  the  Civil  War  by  the 
much  maligned  protective  tariff.  —  The  greatest  profitable  import 
to  us  was  gold,  of  which  we  had  a  balance  of  $105,000,000  for 
the  year. 


X  CONTENTS. 

CHAPTER  XXI. 

PACK 

RETROSPECTS  AND  PROSPECTS 155 

Certain  comments  and  predictions  about  free-trade  legislation 
and  an  answer  to  charges  of  pessimism.  —  Analysis  of  past  legis- 
lation in  its  practical  outcome,  and  the  prospective  hopes  of  the 
operation  of  the  measures  now  gone  into  effect. 

CHAPTER  XXII. 
THE  TRANS-MISSOURI  CASE 160 

A  ruinous  decision  of  the  "Supreme  Court  of  the  United  States. 
—  Destructive  influence  on  values  and  a  blow  to  general  busi- 
ness. —  A  pool  law  wanted  that  will  ensure  railroad  and  business 
prosperity. 

CHAPTER  XXIII. 

THE  LAWS  RELATING  TO  TRUSTS,  CORPORATIONS,  AND  RAILROADS    169 

A  better  administration  of  these  laws  needed.  —  Safeguards 
of  corporations,  and  a  comparison  of  ours  with  those  of  foreign 
countries.  —  The  railroad  situation  and  the  Supreme  Court  deci- 
sion.—  Views  on  the  subject. — The  pooling  question  and  busi- 
ness interests.  —  A  new  law  to  regulate  railroad  rates  and  to 
define  a  violation  of  railroad  law  indispensable. 

CHAPTER  XXIV. 
CURRENCY  LEGISLATION .       .       .179 

Beneficent  effect  of  the  New  Currency  Law.  —  Our  improved 
credit  shown  by  our  new  two  per  cent,  bonds  at  a  premium.  — 
Gold  now  our  unequivocal  standard  of  value.  —  Baneful  effects 
of  previous  uncertainty  as  to  our  standard.  —  Advantage  to  trade 
and  to  money-movement  of  the  extension  of  national  banks.  — 
Good  effect  of  the  gold  enactment  on  the  value  of  American 
securities  abroad.  —  The  surprising  and  dazzling  era  of  business 
prosperity  into  which  the  world  is  entering. 

CHAPTER  XXV. 

PROPHETIC  VIEWS  ON  SILVER 184 

A  review  of  the  subject  prior  to  the  great  presidential  cam- 
paign which  resulted  in  the  maintenance  of  the  gold  standard. 


CONTENTS.  xi 

PAGE 

—  Bryan's  great   coup  at  the  Chicago   convention,  which   he 
carried  by  the  power  of  plagiarism  from  the  old  play  of  "  Jack 
Cade."  —  The  deadly  parallel  of  the  two  comedians.  —  A  decent 
respect  for  old  plays  to  be  encouraged.  —  The  theory  of  an 
international  agreement  discussed,  and  the  theory  of  national 
free  coinage  of  silver  shown  to  be  erroneous  and  fraught  with 
national  danger.  —  The  effect  upon  international  trade  would  be 
disastrous.  —  A  plan   proposed   for  an  international  currency 
that  would  greatly  facilitate  business  operations  in  all  channels 
of  trade  and  commerce  and  vastly  aid  the  progress  of  prosperity 
in  this  country.  —  What  is  left  of  the  silver  issue  to-day. 

CHAPTER  XXVI. 

PRESIDENT  MCKINLEY'S  POLICY  AND  THE  NATION'S  FUTURE         .    194 

A  resume  of  the  policy  of  the  present  administration  as  out- 
lined in  the  inaugural  address  of  the  President  speaking  for 
himself  and  his  party.  —  The  keynote  of  his  policy  is,  first, 
sufficient  revenue  to  run  the  government.  —  Afterward  a  com- 
mission on  the  currency  question.  — The  wisdom  of  McKinley's 
policy  in  putting  revenue  and  tariff  reform  before  the  currency. 

—  Revision,  not  revolution,  of  the  tariff. — The  government  to 
remain  in  the  banking  business,  but  the  currency  to  be  taken 
out  of  politics  and  remodeled  without  reducing  the  volume. — 
Industrial  interests  and  the  rights  of  labor  to  be  guarded  against 
foreign  invasion. 

PART   III. 

WALL  STREET  AND  SOCIAL  PROBLEMS. 
CHAPTER  XXVII. 

THE  MASSES  AND  THE  CLASSES 206 

No  room  for  jealousy  where  political  equality,  by  virtue  of  the 
Declaration  of  Independence  and  of  the  Constitution,  exists.  — 
Sectional  hostilities  and  class  animosities  should  net  be  fostered 
but  suppressed.  —  Erroneous  logic  of  those  who  want  to  get  rich 
quickly. — The  evil  influence  of  communism  and  socialism  on 
the  body  politic.  —  Geographical  discriminations  to  be  repudi- 


xii  CONTENTS. 

PACK 

ated.  —  George  Washington's  opinion  on  the  subject.  —  The 
question  of  the  distribution  of  wealth  and  its  rapid  progress  in 
the  distribution  of  large  fortunes.  —  If  monopolies  rule,  whose 
fault  is  it  ? —  Accumulation  of  capital  in  the  hands  of  a  few,  and 
how  the  socialistic  remedy  would  work.  —  Advice  to  those  who 
want  to  get  rich  rapidly.  —  Victims  of  soaring  ambition.  —  How 
the  Gould  and  Vanderbilt  estates  are  distributed  effectually 
without  the  aid  of  the  socialists. 

CHAPTER  XXVIII. 

A  QUESTION  OF  GOOD  CITIZENSHIP 215 

How  do  wealthy  men  compare  with  others  as  good  citizens? 

—  Conditions  that  antagonize  good  citizenship.  —  The  character 
and  influence  of  the  money  hoarder  and  the  absentee  analyzed. 

—  Decline  in  the  rate  of  interest  and  of  faith  in  the  security  of 
property  one  of  the  most  important  questions  of  the  day. 

CHAPTER   XXIX. 

LABOR  UNIONS  AND  ARBITRATION .    222 

Even  if  there  should  be  nothing  to  arbitrate,  the  arbitration 
will  satisfy  public  opinion.  —  Strikes  should  be  a  last  resort  only 
against  unbearable  grievances.  —  How  arbitration  works  in 
Stock  Exchange  affairs. — The  public  are  victims  of  the  quarrels 
which  they  are  innocent  of  provoking.  —  Cooperation  the  true 
method  of  escaping  the  despotism  of  "  bosses  "  and  improving 
the  condition  of  labor. 

CHAPTER  XXX. 
THE  PHYSICAL  FORCE  ANNIHILATORS      .       '.       .       .        .        .    227 

Several  species  of  this  genus,  including  socialists,  nihilists 
anarchists,  and  communists.  —  A  retrospect  of  their  plans  and 
purposes  for  the  regeneration  of  mankind  and  the  reconstruction 
of  society,  after  going  through  a  few  preliminaries,  such  as  the 
suppression  of  rulers  and  the  extinction  of  capitalists.  —  Accord- 
ing to  the  programme  the  scheme  will  imply  wholesale  assassi- 
nations and  universal  plunder  to  begin  with.  —  After  purposes 
indefinite.  —  A  problem  for  the  socialistic  reformers  as  prelimi- 
nary to  success 


CONTENTS.  xiii 

CHAPTER  XXXI. 

PAGE 

THE  ANNIHILATORS'  METHODS        .       .       .       .       ;       .       .    234 

For  the  regeneration  of  society.  —  A  closer  examination  of  the 
remedies  which  the  various  destructive  fraternities  entitled  to 
this  common  appellation  propose  for  the  inequalities  complained 
of,  and  how  they  would  work  in  practice.  —  Where  will  they 
get  the  men  to  help  them  to  demolish  the  thrones  and  break  up 
present  political  organizations  ?  —  They  could  put  down  the 
present  tyranny  only  by  establishing  a  greater.  —  Failure  of  all 
previous  attempts  to  establish  communities.  —  Our  ballot-box 
and  existing  laws  are  ample  to  maintain  the  strictest  equality, 
to  remedy  all  wrongs  and  redress  all  grievances. 


PART   IV. 

WALL  STREET  AND  INTERNATIONAL  AFFAIRS. 
CHAPTER  XXXII. 

PEACE  AND  PROSPERITY 245 

Some  reflections  on  the  horrors  of  war.  —  How  it  ruins  mate- 
rial prosperity  and  degrades  humanity.  —  Remarks  on  the  efforts 
of  the  six  European  powers  to  put  Europe  on  a  peace  footing. 
— The  favorable  influence  which  the  success  of  the  movement 
would  exercise  on  trade  and  commerce.  —  Plans  for  an  Anglo- 
American  reunion  discussed.  —  Captain  Mahan's  views.  —  A 
defensive  alliance  of  all  civilized  nations  against  a  possible 
invasion  of  barbarians. 

CHAPTER  XXXIII. 

THE  BARING  FAILURE 252 

The  true  story  of  the  cause  of  that  astounding  collapse  told 
for  the  first  time.  —  The  great  Baring  boom,  and  what  the 
scaling  down  of  the  interest  on  British  consols  had  to  do  with 
it. — The  Duke  of  Marlborough's  hand  in  it.  —  Sensational  acts 
of  the  hypnotic  gentleman  who  captivated  the  Argentine  beauty, 
and  through  her  captured  all  the  Barings'  business  in  the  South 
American  Republic.  —  Magnificent  executive  ability  displayed 


xiv  CONTENTS. 

PAGE 

by  Mr.  Lidderdale  in  the  rehabilitation  of  the  firm.  —  Amazing 
gratitude  of  the  benevolent  friend  who  assisted  Lord  Revel- 
stoke  with  the  five  million  dollars.  —  The  future  money  center 
of  the  world. 

CHAPTER  XXXIV. 

THE  VENEZUELA  MESSAGE  PANIC 261 

This  panic  one  of  the  most  far-reaching  and  most  disastrous 
in  its  consequences.  —  It  was  a  surprise,  and  hence  its  great 
power  for  mischief,  especially  at  a  time  when  prosperity  was 
just  under  way.  —  An  utter  collapse  of  credit,  both  foreign  and 
domestic,  aggravated  by  foreign  holders  returning  our  securities. 
— The  Monroe  Doctrine,  and  how  President  Cleveland  con- 
strued it.  —  Simply  an  outburst  of  honest  but  overweening 
patriotism  on  his  part.  —  His  misapprehensions  regarding  the 
nature  of  so-called  international  law,  and  what  constitutes  a 
casus  belli.  — The  President's  just  cause  for  offense  at  Salisbury's 
hauteur,  but  the  Monroe  Doctrine  not  applicable  to  the  case. 

—  How  the   message   and   its   consequences   played  into   the 
hands  of  the  free-silver  faction  and  helped  to  make  the  candi- 
dacy of  Bryan  possible. 

CHAPTER  XXXV. 
OUR  NATION'S  CREDIT 272 

Why  should  not  this  credit,  as  illustrated  in  the  market  value 
of  our  bonds,  be  on  as  high  a  plane  as  the  credit  of  other 
nations?  A  plea  for  the  Sherman  Silver  Law,  and  how  it  was 
instrumental  in  tiding  the  financial  world  over  the  Baring  panic. 

—  A  brief  retrospect  of  bond  issues  and  cognate  subjects  of 
national  interest. 

CHAPTER   XXXVI. 

OUR  NATION'S  NEW  DEPARTURE 276 

The  influence  of  our  recent  victories  on  the  minds  and  pur- 
poses of  other  nations.  —  Significance  of  the  Czar's  note  on 
disarmament.  —  Was  our  war  with  Spain  justifiable  ?  —  The  part 
played  by  the  President  and  Congress  in  the  war.  —  The  prob- 
lem of  our  new  possessions.  —  What  shall  we  do  with  them? 


THIS  BOOK 

EJS  Begpectfullg  Inacribeli 

TO  THOSE 

ABLE  STATESMEN,  POLITICIANS,  FINANCIERS, 
AND   MEN  OF  AFFAIRS, 

TO  WHOSE  CONSTANT  GUIDANCE  IS   DUE  THE  ADVANCEMENT  OF 
OUR  COUNTRY  ALONG   EVER-WIDENING   PATHS   OF 

PEACE   AND   PROSPERITY 


THE  WALL  STREET  POINT  OF  VIEW. 


PART    I. 

WALL    STREET  ITSELF. 


CHAPTER   I. 

WALL  STREET  AS  A  GAUGE  OF  BUSINESS  PROSPERITY. 

What  it  is :  its  area,  population,  and  institutions.  — The  difference  between 
natural  and  artificial  conditions,  the  latter  being  the  false  standard  of 
judgment  by  outsiders.  —  People  decry  Wall  Street  speculation  without 
a  correct  knowledge  of  its  character.  —  The  Street  is  not  a  gambler's 
paradise,  but  a  place  where  hard,  honest  work  tells.  —  It  is  a  public 
benefactor  and  once,  at  least,  saved  the  country.  —  The  center  to  which 
the  surplus  money  of  the  world  flows  for  investment. 

THE  district  known  as  Wall  Street  embraces  more  wealth 
in  proportion  to  area  than  any  other  space  of  similar 
dimensions  in  the  world.  Considering  even  the  mere  thorough- 
fare known  by  that  name  and  extending  from  Trinity  Church 
to  the  East  River,  the  same  assertion  holds  good.  This  latter 
limit  is  the  one  mentally  placed  by  the  great  majority  of  our 
people  upon  the  financial  heart  of  the  country,  that  throbs  with 
the  daily  ebb  and  flow  of  millions,  infusing  life  into  all  our  vast 
enterprises. 

The  Wall  Street  region  includes  in  its  wealthy  grasp  the  large 
majority  of  New  York  banks  and  other  financial  institutions, 
including  savings  banks.  It  is  the  great  center  of  the  insurance 
companies,  life,  fire,  and  marine  ;  of  the  great  Trust  Companies 
which  command  thousands  of  millions  of  capital,  and  are  the 
custodians  of  many  of  the  largest  and  most  wealthy  estates  in 
the  country.  Finally,  the  region  known  as  Wall  Street  has 
virtually'  a  contingent  population  of  three  millions,  which  is  just 


2  THE   WALL   STREET   POINT   OF   VIEW. 

about  the  census  record  of  the  thirteen  original  states  when 
they  cut  loose  from  Great  Britain  and  asserted  their  independ- 
ence. In  addition  to  the  financial  institutions  as  above  stated, 
Wall  Street  has  banks  with  large  capital  connected  with  all 
foreign  nations.  China,  no  less  that  the  comparatively  con- 
tiguous London,  is  represented  by  banking  institutions  here. 

It  has  been  the  habit  of  too  many  people  —  well-meaning 
people,  too  —  to  decry  Wall  Street  as  hurtful  to  the  morals  of 
the  country  and  injurious  to  our  best  business  interests,  —  all 
of  which  is  mistaken.  Wall  Street  has  been  very  aptly  de- 
scribed as  the  "  business  pulse  of  the  nation,"  and  that  is  what 
it  is,  in  the  truest  sense  of  the  term.  As  the  mercury  in  the 
thermometer  denotes  the  degrees  of  heat  and  cold,  so  do  the 
fluctuations  in  the  Wall  Street  markets  show  the  rise  and  fall  of 
the  business  activity  of  the  country.  Let  there  be  any  activity 
in  mercantile  or  manufacturing  circles,  and  it  is  immediately 
reflected  in  the  Stock  Exchange  and  the  other  exchanges  where 
values  are  dependent  upon  business  activity  and  financial  confi- 
dence. On  the  other  hand,  causes  that  influence  the  outside 
world  unfavorably  have  a  depressing  effect  in  Wall  Street,  and 
the  prices  of  securities  and  products  take  a  lower  turn.  These 
are  the  results  when  natural  conditions  are  allowed  to  prevail. 
Of  course  there  are  times  when  speculative  syndicates  get  con- 
trol, and  by  their  manipulations  create  artificial  conditions  and 
artificial  results.  Then  it  is  that  panics  are  liable  to  occur;  in 
fact,  I  doubt  if  there  has  ever  been  a  panic  in  Wall  Street  that 
was  not  due  to  the  work  of  such  manipulations.  Wall  Street 
is  a  place  where  the  laws  of  cause  and  effect  are  conspicuously 
potent,  and  it  is  as  impossible  for  any  combination  of  men  to 
resist  these  laws  without  making  trouble  as  it  is  for  a  human 
being  to  defy  the  forces  of  nature.  An  irreverent  operator  in 
grain  speculations,  commenting  once  on  the  failure  of  a  pool 
to  put  up  the  price  of  wheat  and  maintain  it  in  the  face  of  a 
big  crop,  said,  "It  is  of  no  use  trying  to  buck  against  God 
Almighty ;  he  can  upset  the  bulls  every  time." 

To  the  student  of  affairs  there  is  more  suggestive  truth  ex- 
pressed in  these  few  terse  words  of  a  disappointed  speculator 


WALL  STREET  A  GAUGE  OF  PROSPERITY.    3 

than  in  whole  columns  of  the  tirades  preached  against  Wall 
Street's  ways  by  those  ministers  who  have  only  a  superficial 
idea  of  the  subject  they  are  talking  about.  Wall  Street  is 
not  a  gambler's  paradise.  There  is  no  place  in  the  business 
world  where  more  hard  work,  closer  calculation,  keener  insight 
into  affairs,  and  philosophical  and  conservative  conclusions  are 
required  than  in  the  offices  of  its  bankers  and  brokers ;  there 
is  no  class  of  men  who  watch  events  more  closely  than  the 
operators  in  its  markets.  In  the  stress  of  war  times  it  has 
been  to  Wall  Street  that  the  government  turned  for  help.  It 
was  from  Wall  Street  that  the  assistance  once  came  which 
made  a  continuance  of  the  government  even  a  possibility,  and 
it  has  always  been  ready  to  respond  to  any  call,  when  finan- 
cial or  business  problems  were  to  be  met  and  solved.  It  is 
very  true  that  men  have  taken  a  gambling  advantage  of  oppor- 
tunities afforded  by  this  great  market,  but  these  are  not  the 
men  who  have  made  it  reflective  of  the  business  prosperity, 
not  only  of  this  country  but  of  other  countries,  —  a  place 
where  surplus  money  from  all  over  the  world  flows  for  invest- 
ment in  the  securities  of  the  corporations  which  are  dependent 
upon  the  material  development  of  the  United  States  of  Amer- 
ica—  the  greatest  land  under  God's  sunlight.  No,  we  cannot 
do  without  Wall  Street. 

How  would  our  one  hundred  and  eighty  thousand  miles  of 
railroads  have  been  constructed  without  Wall  Street?  These 
great  pioneers  of  development,  prosperity,  and  civilization  would 
have  remained  exceedingly  limited  in  their  extent  and  scope  if 
the  bonds  to  build  them  had  not  been  negotiated  by  Wall  Street 
financiers.  Think  of  the  fertile  lands  that  have  thus  been 
thrown  open  to  millions  from  all  nations  of  the  globe,  and  the 
enormous  increase  of  wealth  that  has  followed  this  opening  of 
vast  national  resources.  Then  again,  look  at  the  army  of  well- 
paid  employes  connected  with  the  railroads  themselves,  who, 
together  with  those  who  work  in  the  interdependent  trades,  — 
railroad  building,  car  building,  and  railroad  supplies  of  every  de- 
scription, —  amount  to  nearly  two  millions.  While  it  is  unfortu- 
nately true,  as  I  have  pointed  out  in  my  book,  "  Twenty-eight 


4  THE   WALL   STREET   POINT   OF   VIEW. 

Years  in  Wall  Street,"  and  in  other  publications,  that  disrepu- 
table railroad  projectors  and  managers  have,  especially  through 
the  medium  of  construction  companies,  made  railroads  the 
means  to  their  dishonest  ends ;  yet  in  spite  of  such  abuses  this 
vast  railroad  system,  advanced  and  supported  by  Wall  Street 
capital,  has  been  the  chief  instrument  for  a  national  increase 
which  has  no  historic  parallel. 

Not  only  is  Wall  Street  indispensable  to  this  country,  but 
foreign  nations  also  are  feeling  the  benefit  of  its  operations 
more  and  more  every  year.  The  London  Stock  Exchange 
and  the  Paris  and  Berlin  Bourses  would  suffer  if  the  New  York 
Stock  Exchange  were  to  be  closed  for  a  week  or  even  for  a 
day;  the  progress  of  great  industries  dependent  on  them 
would  languish  just  as  surely  as  our  own  railroad,  telegraph, 
and  other  enterprises  would  suffer  in  the  failure  of  the  great 
financial  fountain  from  which  they  draw  their  invigorating 
tonic.  Enterprise  everywhere  would  be  depressed  as  if  seized 
by  a  sort  of  financial  paralysis.  What  folly  is  this  enmity 
toward  Wall  Street !  Let  us  condemn  and  cut  off  its  evil, 
parasitic  growths,  but  let  us  recognize  and  glory  in  the  fact  that 
this  great  financial  center  is  fast  approaching  the  point  at  which 
it  is  destined  to  become  the  enormous  clearing  house  of  the 
world's  enterprises  and  industries.  In  the  course  of  evolution 
and  a  higher  civilization  we  might  be  able  to  get  along  com- 
fortably without  Congress,  but  without  Wall  Street,  never. 


CHAPTER   II. 

THE  STUDY  OF  THE  STOCK  MARKET. 

The  power  of  speculative  fascination  over  a  large  number  of  people.  — 
Bad  results  of  adopting  second-hand  opinions.  — The  laws  of  specula- 
tion and  investment  must  be  studied  profoundly.  —  Fact  and  rumor 
should  be  carefully  distinguished.  —  Hard  study  of  facts  and  realities 
generally  leads  to  sound  and  accurate  conclusions.  —  It  is  also  necessary 
to  study  the  circumstances  and  events  which  cause  real  values  to  fluc- 
tuate. —  How  natural  laws  eventually  regulate  values  and  reduce  inflated 
ones  to  their  true  basis. 

A  NYTHING  that  is  worth  doing  is  worth  doing  well.  In 
£\.  order  to  do  anything  well,  one  must  study  the  subject 
thoroughly,  not  necessarily  in  books,  because  books  are,  except  as 
to  the  laying  down  of  principles,  rather  unsatisfactory  teachers. 

The  stock  market  is  a  most  fruitful  and  fascinating  field  of 
study.  It  attracts  more  influential  and  well-to-do  men  than 
any  other  arena  of  activity  in  American  life,  and  of  course  a 
great  deal  of  study  is  bestowed  upon  it.  The  reasons  why  the 
results  of  so  much  study  are  not  always  commensurate  with  the 
labor  and  time  employed  are  numerous.  Some  of  them  are 
substantially  as  follows  :  — 

People  have  preconceived  notions.  They  are  not  willing  to 
clear  their  minds  of  existing  theories  and  bring  themselves  down 
to  close  dealing  with  facts.  They  are  apt  to  base  their  conclu- 
sions on  the  opinions  of  others.  Now,  opinions  as  to  the  value 
of  anything  are  sure  to  differ,  and  opinions  as  to  future  values 
differ  still  more  widely,  just  as  the  spokes  of  a  wheel  are  wider 
apart  as  you  travel  away  from  the  hub.  When  you  reach  out 
into  the  future,  you  are  getting  away  from  the  hub  of  the  pres- 
ent. People  are  usually  unwilling  to  act  on  conclusions  that 
conflict  with  their  desires,  and  that  involve  the  acceptance 
of  immediate  losses.  They  resemble  the  wounded  man  who 

5 


6  THE   WALL   STREET   POINT   OF  VIEW. 

refuses  to  let  the  surgeon  cut  off  his  leg  when  he  is  told  that 
amputation  will  probably  save  his  life.  They  are  apt  to  study 
in  a  superficial  manner,  without  thoroughness,  using  scraps  and 
smatterings  of  knowledge  when  even  the  most  exact  information 
is  hardly  sufficient. 

Other  reasons  could  be  adduced,  but  they  might  be  need- 
less. A  certain  king  excused  the  municipality  of  a  town  that 
neglected  to  fire  a  salute  in  his  honor  on  their  giving  him  the 
first  one  of  fifty  good  reasons,  —  that  they  had  no  powder. 
The  other  forty-nine  were  suffered  to  remain  undivulged. 
Enough  reasons  have  been  given  here  to  explain  why  so  many 
people  fail  to  study  the  stock  market  successfully. 

But  while  it  is  very  easy  to  pick  to  pieces  the  various  systems 
that  are  sure  to  win  on  the  stock  exchange,  and  to  criticise  the 
methods  of  study  of  the  prejudiced,  it  is  most  difficult  to  lay 
down  absolute  rules  for  the  successful  study  of  the  share  mar- 
ket. One  invariable  rule  there  is,  but  it  requires  large  capital 
and  patience  to  practise  it.  It  is(this  :  Buy  only  what  you  can 
pay  for;  buy  when  cheap  and  sell  when  dear.  The  veriest 
financial  infants  can  see  the  force  of  this. 

Yet  even  this  precept  has  its  weak  points.  For  instance, 
how  is  a  person  to  be  absolutely  certain  that  a  given  stock  is 
cheap  or  dear  at  a  given  time  ?  You  say,  by  comparison  ?  But 
if  he  compares  the  price  with  what  it  was  at  any  past  period,  he 
must  also  be  able  to  state  all  the  facts  that  existed  at  that 
period  having  any  bearing  on  this  stock,  and  since  these  facts 
may  run  into  the  thousands  as  to  number,  and  into  all  parts  of 
the  country  as  to  place,  our  learner  has  a  heavy  contract  on 
hand.  Then,  too,  he  must  bring  to  bear  a  clear  judgment, 
and  a  resolution  such  as  soldiers  exercise  when  they  charge 
batteries,  and  he  must  be  prepared  next  day  to  find  out  that 
he  was  wrong.  After  a  careful  and  exhaustive  search  into  all 
the  materials  at  hand,  he  buys  shares  at,  say,  60  per  cent,  of 
par,  as  being  cheap  at  the  price,  and  really  worth  more  money, 
and  next  day  they  may  be  offered  at  50.  He  then  has  really 
lost  £10  on  each  share ;  but  if  he  holds  the  purchase,  and  it 
ultimately  advances  to  par,  he  has  gained  $40  per  share. 


THE  STUDY  OF  THE  STOCK  MARKET.      7 

And  suppose  he  sells  on  any  given  day  at  par,  and  a  week 
after  that  the  shares  sell  at  no,  he  then  loses  $10  per  share. 
So  that  this  "  safe  "  road  to  success  has  its  stumbling  blocks  as 
well  as  others,  although  they  are  not  so  dangerous.  In  such  a 
road  there  are  no  deadly  pitfalls.  The  men  who  travel  it  are 
not  tempted  to  defalcations  and  suicides. 

Horace  Greeley  once  said  that  the  way  to  resume  specie  pay- 
ments was  to  resume ;  and  it  might  also  be  said  that  the  way 
to  study  the  stock  market  is  to  study  it.  One  distinguished 
and  generally  successful  stock  operator  of  the  period  is  credited 
with  being  in  daily  receipt  of  numerous  pieces  of  information 
from  various  parts  of  the  country  as  to  the  condition  of  crops, 
weather,  freights,  passenger  traffic,  in  short,  all  facts  that  go  to 
make  up  the  status  of  railroad  enterprises.  These  private  bits 
of  information  are  not  open  to  the  general  public  —  they  cost 
too  much,  and  call  for  too  much  machinery ;  but  the  bureaus 
of  public  information  are  continually  sending  out  intelligence, 
and  it  is  mostly  trustworthy.  This  class  of  facts  must  be  dis- 
tinguished from  mere  rumors. 

Rumor  is,  as  a  rule,  uncertain  and  untrustworthy.  It  has 
been  compared  to  an  animated  thing  that  begins  its  career  by 
being  small  and  compact,  but  as  it  stalks  along  it  becomes 
larger  and  less  definite  as  to  form,  until  at  last  it  is  like  a  mon- 
strous cloud  that  has  neither  shape  nor  consistency,  and  finally 
disappears,  no  one  knows  how  or  where.  But  to  study  facts 
leads  to  generally  accurate  conclusions ;  and  accurate  conclu- 
sions are  apt  to  lead  to  wise  transactions. 

Thus,  the  fact  of  large  harvests  in  the  year  1891  in  the 
United  States,  coupled  with  the  fact  of  poor  harvests  in  Europe 
in  the  same  year,  led  to  the  conclusion  that  our  grain  would 
be  in  demand  for  foreign  shipment,  and  that  the  earnings  of 
our  railroads  would  be  increased.  The  conclusions  were  sound 
and  the  earnings  were  increased,  and  judicious  students  of  the 
market  bought  stocks  for  a  rise.  Then  the  fact  that  stocks  rose 
and  kept  on  rising,  coupled  with  the  fact  that  the  general 
public  were  buyers,  and  with  the  additional  fact  that  the  public 
prefer  to  be  buyers  and  to  buy  at  high  prices,  and  not  to  buy 


8  THE   WALL   STREET   POINT   OF   VIEW. 

at  all  unless  prices  are  high,  led  these  same  judicious  students 
to  sell  the  same  stocks  during  the  prevalence  of  high  prices,  — 
both  the  stocks  which  they  owned  and  large  amounts  which 
they  did  not  own.  Again,  the  study  of  facts  led  to  wise  con- 
clusions, and  these  ended  in  successful  results.  Both  as  bulls 
and  as  bears  the  wise  students  have  fared  well.  The  careless  and 
superficial  public,  coming  in  too  late  as  bulls,  found  themselves 
at  last  compelled  to  become  unwilling  sellers  at  greater  or 
less  losses,  in  some  cases  so  severe  as  to  shatter  households 
and  drive  citizens  to  ruin. 

Thus  the  person  who  studies  real  values  must  not  be  content 
with  that  alone.  He  must  also  study  the  facts  that  in  times 
of  stress  and  storm  make  real  values  fluctuate  as  wildly  in 
manner,  if  not  in  amount,  as  those  of  the  most  fanciful  secu- 
rities, and  he  must  learn  that  no  operation  on  margin  is  really 
safe  unless  the  margin  is  large  beyond  the  ordinary  run,  and 
is  backed  by  equally  large  reserves.  Some  financial  teachers 
lay  it  down  that  your  risks  should  not  exceed  25  per  cent, 
of  your  capital.  This  is  excessive  prudence ;  but  the  man  who 
keeps  half  a  mile  away  from  the  edge  of  a  cliff  will  never  fall 
from  it.  One  who  has  studied  the  share  market  carefully  has 
eventually  found  that  if  he  is  able  to  pay  one  half  the  market 
price  of  his  holdings,  he  need  have  little  fear  as  to  the  other 
half ;  that  is,  on  judicious  selections  of  properties. 

No  mention  is  made  here  of  shares  that  sell  in  December 
at  72  and  in  March  at  30.  Whoever  buys  such  goods  should 
pay  for  them  and  put  them  away,  and  let  them  incubate  with 
such  patience  as  is  attributed  to  the  hopeful  setting  hen. 

The  student  of  the  stock  market  has  at  certain  periods  no 
easy  task  before  him.  Imports  are  sometimes  large,  and  ex- 
ports small.  We  sell  to  foreigners  a  million  per  week  of  cotton, 
and  buy  from  them  two  millions  per  week  of  coffee,  the  cotton 
yielding  us  a  small  profit,  the  coffee  yielding  foreigners  an 
immense  profit.  Other  nations  at  times  do  not  seem  to  prefer 
our  grains  to  those  of  Russia  and  the  East,  despite  those  foreign 
markets  of  bewildering  extent  and  good  prices  which  exist,  I 
fear,  only  in  the  imagination  of  free-traders.  Then,  too,  the 


THE   STUDY   OF   THE   STOCK   MARKET.  9 

indebtedness  of  corporations  and  individuals  acts  as  a  constant 
menace  to  the  natural  tendency  of  loose  capital  to  be  lent  out 
to  useful  enterprises. 

Yet,  at  the  bottom  of  all  this  turbulent  mass  of  facts  there 
are  natural  laws  at  work  which,  if  we  study  them  in  relation 
to  the  objects  which  they  control,  will  be  found  to  be  as  sure 
in  their  operation  as  sunrise.  The  collapse  of  the  iniquitous 
coal  combination,  as  cruel  as  one  to  raise  the  price  of  water  or 
air,  was  the  result  of  natural  law,  and  the  same  laws  are  busy 
to-day,  and  the  facts  are  always  with  us.  It  is  the  business 
of  the  diligent  to  find  them  and  to  profit  thereby. 

Next  to  the  unwisdom  of  selecting  and  following  bad  or  in- 
competent advisers  in  matters  of  speculation  and  investment, 
there  are  also  certain  persons  whom,  if  you  wish  to  do  well  and 
make  a  fortune  honestly,  you  should  be  careful  to  avoid.  You 
will  not  always  know  them  by  their  appearance ;  in  fact,  that  is 
often  the  worst  rule  to  go  by,  for  they  are  generally  well  dis- 
guised. It  is  in  their  walk,  talk,  and  conversation  that  you  will 
find  them  out,  and,  that  this  be  the  easier,  I  have  made  a  col- 
lection of  their  characteristics,  as  follows  :  — 
Avoid  a  man 

Who  vilifies  his  benefactor ; 

Who  unjustly  accuses  others  of  bad  deeds ; 

Who  never  has  a  good  word  for  anybody ; 

Who  is  always  prating  about  his  own  virtues ; 

Who,  when  he  drinks,  habitually  drinks  alone ; 

Who  boasts  of  the  superiority  of  his  family ; 

Who  talks  religion  down-town  in  connection  with  his  daily 
business  affairs ; 

Who   talks   recklessly   against   the    virtue   of   respectable 
women ; 

Who  runs  in  debt  with  no  apparent  intention  of  paying ; 

Who  borrows  small  sums  on  his  note  or  check  dated  ahead  ; 

Who  won't  work  for  an  honest  living ; 

Who  looks  down  upon  those  who  do ; 

Who  imputes  bad  motives  to  those  trying  to  do  good ; 

Who  betrays  confidence ; 


10  THE   WALL   STREET   POINT   OF  VIEW. 

Who  lies ; 

Who  is  honest  only  for  policy's  sake ; 

Who  deceives  his  wife  and  boasts  of  it  to  others ; 

Who  chews  tobacco  in  a  public  conveyance ; 

Who  gets  intoxicated  in  public  places ; 

Who  partakes  of  hospitality  and  talks  behind  his  entertain- 
er's back ; 

Who  borrows  money  from  a  friend  and  then  blackguards 

the  lender. 

With  a  population  of  80,000,000  people,  which  this  country 
now  has,  it  is  easy  to  find  associates  in  life  without  selecting 
men  possessed  of  any  of  these  characteristics,  and  life  is  the 
better  worth  living  without  them. 

You  will  both  save  and  make  money  by  strict  observance  of 
this  short  catalogue  of  avoidances.  You  are  not  called  upon  to 
do  anything  or  to  risk  any  money  in  the  exercise  of  this  discre- 
tion. It  simply  consists  in  letting  such  people  severely  alone, 
and  if  you  have  been  in  the  habit  of  being  imposed  upon  by 
such  characters,  you  will  find  your  happiness  as  well  as  your 
treasury  greatly  increased  by  prudently  avoiding  them. 


CHAPTER   III. 

MONEY  AND  USURY. 

Various  opinions  regarding  interest  and  usury.  —  Why  should  not  com- 
pensation for  the  use  of  money  be  left  to  the  freedom  of  contract 
untrammeled  by  restrictive  laws?  —  Views  of  Lord  Bacon  and  Lord 
Mansfield  on  usury  and  interest.  —  The  word  "  interest "  not  known  in 
Bacon's  time.  —  All  laws  against  usury  capable  of  evasion.  —  Various 
rates  and  the  laws  of  usury  pertaining  to  different  states.  —  Freedom 
of  contract  the  true  doctrine  in  money-lending  and  borrowing. 

"  IV  /TONEY  and  Usury  "  is  a  subject  that  has  perhaps  been 
IVl.  more  extensively  discussed  than  any  other  within  the 
sphere  of  trade  and  finance,  and  usury  has  been  the  fertile 
theme  of  a  great  amount  of  both  sense  and  nonsense,  as  well  as 
of  a  large  number  of  foolish  laws. 

In  times  gone  by  the  word  "  usury "  was  employed  in  the 
same  sense  as  "  interest "  is  now,  and  Lord  Bacon,  in  his  essay 
on  usury,  evidently  attaches  this  signification  to  it,  as  he  makes 
a  distinction  between  high  and  low  "  rates  of  usury,"  and  the 
context  shows  he  was  unacquainted  with  the  term  "  interest." 
He  criticises  pretty  severely  the  critics  on  usury,  and  says : 
"  Many  have  made  witty  invectives  against  usury.  They  say 
that  it  is  a  pity  the  devil  should  have  God's  part,  which  is  the 
tithe,  that  the  usurer  is  the  great  Sabbath-breaker  because  his 
plough  goeth  every  Sunday." 

So  we  see  from  Bacon's  opinion  that  the  prejudice  against 
paying  for  the  use  of  other  people's  money  is  as  old  as  it  is 
unreasonable. 

We  have  no  record  of  any  period  when  within  the  confines  of 
civilization  men  were  not  in  the  habit  of  paying  for  the  use  of 
the  property  of  other  men  ;  in  fact,  such  compensation  marks 
the  dawn  of  civilization  —  a  time  when  it  was  discovered  to  be 


12  THE  WALL   STREET  POINT   OF  VIEW. 

better  to  hire  another  man's  goods  or  lands  than  to  kill  him  for 
the  sake  of  becoming  their  owner.  An  equivalent  for  the  use 
of  lands  or  buildings  we  style  rent;  for  the  use  of  chattels, 
hire ;  for  the  use  of  money,  interest.  One  of  the  most  notice- 
able facts  about  the  last-named  equivalent  is  that  in  almost  all 
communities  its  amount,  as  related  to  the  material  for  the  use 
of  which  it  is  paid,  has  been  made  the  subject  of  legislation. 
Laws  have  never  been  enacted  regulating  the  prices  of  rents  or 
of  the  hire  of  chattels,  but  statutes  regulating  the  interest  of 
money  are  beyond  computation  as  to  number,  and  their  exist- 
ence dates  back  to  epochs  beyond  which  public  record  and  the 
memory  of  mankind  run  not  to  the  contrary. 

Since  this  is  an  undeniable  fact,  there  must  be  a  reason  for 
its  origin  and  its  persistent  vitality.  May  not  this  be  the  reason  ? 
—  that  money  not  being  a  commodity,  but  the  representative 
of  all  commodities,  capable  of  passing  through  all  metamor- 
phoses of  lands,  houses,  cattle,  grain  —  in  short,  of  all  transfer- 
able things  whatsoever  —  may  be  said  to  have  a  value  free  from 
such  changes  as  other  commodities  are  constantly  undergoing ; 
therefore,  while  the  owner  of  these  may  lawfully  demand  any 
price  he  pleases  for  the  use  of  such  property,  and  take  all  he 
can  get,  the  owner  of  money  must  not  demand  or  take  more 
than  a  certain  price,  which  price  shall  be  stated  by  the  law- 
makers of  the  community.  This  is  the  probable  basis  of  usury 
laws,  though  we  should  not  assert  that  laws  are  enacted  solely 
in  order  to  assert  a  principle.  As  a  matter  of  fact,  they  are 
kept  on  the  statute  books  in  deference  to  a  sentiment  which  is 
supposed  to  pervade  the  public  mind,  that  poor  people  must 
be  protected  from  the  rapacity  of  money-lenders. 

It  will  not  be  difficult  to  show  that  the  alleged  principle  on 
which  usury  laws  are  based  is  illogical ;  and  further,  that,  as  a 
matter  of  fact,  these  laws  do  not  prevent  poor  borrowers,  or 
borrowers  upon  hazardous  pledges,  from  paying  high  prices  for 
the  use  of  money.  That  money  is  not  a  commodity  because 
it  is  the  representative  and  summary  and  equivalent  of  all 
commodities,  is  a  conclusion  which  is  not  only  open  to  doubt, 
but  may  be  with  reason  flatly  denied.  That  the  greater  includes 


MONEY   AND   USURY.  13 

the  less  is  an  axiom  ;  and  if  money  includes  all  commodities,  it 
must  itself  be  the  greatest  of  commodities.  It  is  the  nearest 
approach  to  an  unchangeable  measure  of  values  that  can  be 
attained,  but  at  the  same  time  it  remains  a  commodity,  subject, 
as  are  other  commodities,  to  the  laws  of  supply  and  demand. 
In  the  varying  conditions  of  trade,  its  use  may  at  one  time 
command  interest,  or  usury,  at  a  rate  of  but  three  per  cent,  per 
annum,  while  at  another  it  may  command  six  per  cent,  or 
more.  These  terms  indicate  the  altered  relation  in  its  supply 
and  demand,  consequent  upon  the  variations  in  production  or 
consumption  of  other  commodities.  There  is,  indeed,  no  abso- 
lute measure  of  value  except  it  be  the  general  average  resulting 
in  society  from  the  continually  varying  relations  which  com- 
modities bear  to  each  other  in  respect  of  prices.  To-day  a 
bushel  of  No.  i  winter  wheat  shall  be  exchangeable  for  a  barrel 
of  crude  petroleum,  or  ten  yards  of  sheeting,  or  one  gold 
dollar ;  to-morrow  it  shall  be  exchangeable  for  two  barrels  of 
crude  petroleum,  or  fifteen  yards  of  sheeting,  or  one  gold  dollar 
and  a  half.  But  we  must  have  terms  in  which  these  fluctua- 
tions may  be  expressed,  which  shall  form  an  understandable 
basis  of  exchange  of  products  between  individuals  and  among 
nations  ;  hence  the  elaboration  of  this  means  of  facilitating 
commerce  into  vast  monetary  systems. 

Money  is  not  only  an  admitted  equivalent  for  all  commodities, 
but  is  itself  a  commodity  and  the  greatest  of  commodities  in  this 
respect  —  that  it  is  the  most  strongly  desired,  the  most  widely 
known,  and  the  most  universally  possessed.  As  civilization  has 
progressed,  so  has  the  necessity  developed  for  such  an  equivalent 
in  the  most  concentrated  form,  and  one  capable  of  easy  trans- 
mission. Along  with  the  social  evolution  of  the  most  enlightened 
nations,  has  come,  by  successive  steps,  the  adoption  of  the  most 
precious  available  metal,  gold,  as  the  basis  of  this  equivalent, 
and  the  most  compact  exchangeable  representative  commodity. 

Some  writers  have  asserted  that  money  is  not  a  commodity, 
because  it  is  neither  produced  nor  consumed.  The  objec- 
tion to  this  statement  is  that  it  is  not  true.  Money  is  both 
produced  and  consumed.  It  is  first  dug  out  of  the  earth, 


14  THE  WALL   STREET   POINT   OF   VIEW. 

and  afterward  it  undergoes  a  constant  consumption  by  abrasion. 
It  is  estimated  that  the  production  of  gold  keeps  but  slightly 
in  advance  of  its  consumption  year  by  year,  while  in  the  last 
twenty  years  the  production  of  silver  has  been  much  in  excess 
of  the  consumption.  Therefore  the  relations  of  gold  and  silver 
have  changed.  Gold  is  dearer  and  silver  is  cheaper.  This  one 
fact  shows  that  the  precious  metals  used  as  money  by  the  com- 
mon consent  of  mankind  are,  in  truth,  commodities.  Is  it 
logical  that  the  greater,  the  representative  commodity  should, 
in  its  operations,  be  bound  by  restrictive  laws  which  have  never 
been  sought  to  be  applied  to  the  lesser  commodities? 

It  would  seem,  therefore,  that  no  reason  worth  the  name 
exists  why  a  person  having  money  which  he  is  able  to  spare  to 
the  uses  of  others,  should  not  receive  from  them  such  compen- 
sation for  its  use  as  he  and  they  may  by  contract  agree  upon. 
And  all  reasons  urged  against  usury  will  be  found  to  be  either 
wholly  sentimental  or  based  upon  misconceptions  of  the  true 
functions  of  money. 

History  has  already  passed  upon  Napoleon's  Berlin  decrees, 
and  his  other  laws  against  the  use  of,  and  traffic  in,  English 
merchandise ;  the  witchcraft  laws  of  New  England  have  died  ; 
Quakers  are  no  longer  persecuted  in  Massachusetts  and  Con- 
necticut ;  Great  Britain  has  abolished  all  usury  statutes ;  Con- 
necticut has  done  the  same,  as  well  as  many  of  her  sister 
States ;  they  never  have  disfigured  the  statute  books  of  Califor- 
nia; but  in  New  York,  the  greatest  of  the  States,  the  most 
commercial,  the  richest,  the  State  where  the  fullest  play  should 
be  given  to  the  traffic  in  useful  commodities,  it  is  a  crime  to 
lend  money  on  time  at  seven  per  cent,  per  annum  ! 

Laws  that  regulate  the  rate  of  interest  in  cases  where  no 
contract  is  made,  or  on  sums  that  have  become  overdue,  are 
natural  and  reasonable ;  but  no  legislation  can  be  seriously 
defended  that  attempts  to  prohibit  one  citizen  from  making 
any  contract  with  another,  touching  useful  commodities  or  ser- 
vices, which  both  agree  to  ;  still  less  where  it  brands  one  of  the 
contracting  parties  with  guilt  and  enables  the  other  party  to 
rob  him  with  impunity,  and  even  to  procure  his  incarceration. 


MONEY   AND   USURY.  15 

If  we  are  wrong  in  this  way  of  thinking,  we  prefer  to  be  wrong 
in  company  with  the  enlightened  sense  of  Great  Britain,  Con- 
necticut, and  California  —  to  mention  no  others  —  rather  than 
to  be  right  in  company  with  the  antiquated  sense  of  New  York. 

As  to  the  many  devices  used  to  nullify  these  statutory  tram- 
mels laid  upon  the  freedom  of  man's  dealings  with  man,  Lord 
Mansfield,  one  of  the  great  English  judges  of  the  eighteenth 
century,  in  delivering  an  opinion  on  usury,  said  :  "  Where  the 
real  truth  is  a  loan  of  money,  the  wit  of  man  cannot  find  a  shift 
to  take  it  out  of  the  statute."  Lord  Mansfield,  in  his  patriotic 
admiration  of  the  English  law  which  he,  in  common  with  Black- 
stone  and  some  others,  considered  the  "  perfection  of  human 
reason,"  was  doubtless  sincere  in  the  expression  of  this  opinion, 
but  there  are  very  few  judges  in  the  present  day  who  do  not 
know  that  there  never  has  been  an  usury  law  passed  which 
human  ingenuity  has  not  found  a  method  of  evading.  Many 
instances  of  such  evasions  and  of  a  great  variety  of  methods  of 
evasion  can  be  easily  cited  from  the  standard  law  books  and 
reports,  even  from  Lord  Mansfield's  day  down  to  the  present 
time. 

Bacon,  with  his  love  for  systematizing  every  subject  which 
he  handled,  divided  the  arguments  that  prevailed  in  his  time 
against  and  for  usury,  or  interest,  and  states  them  as  follows  in 
his  quaint  but  terse  English.  He  says  :  "The  discommodities 
of  usury  are,  first,  that  it  makes  fewer  merchants,  for  were  it 
not  for  this  lazy  trade  of  usury,  money  would  not  lie  still,  but 
would  in  great  part  be  employed  upon  merchandizing,  which 
is  the  vena  porta  of  wealth  in  a  state ;  the  second,  that  it  makes 
poor  merchants,  for  as  a  farmer  cannot  husband  his  ground  so 
well  if  he  sit  at  a  great  rent,  so  the  merchant  cannot  drive  his 
trade  so  well  if  he  sit  at  a  great  usury." 

It  would  seem  that  the  borrowing  of  money  at  a  high  rate  in 
our  times  works,  as  a  rule,  the  very  contrary  to  what  many  peo- 
ple in  Bacon's  day  had  estimated  as  the  results.  A  man  seldom 
borrows  money  at  a  high  rate,  or  at  any  rate,  now,  without  a 
fair  prospect  of  investing  it  so  as  to  have  a  profit  after  paying 
the  interest.  So  the  merchant  never  "  sits  at  great  usury,"  to 


l6  THE   WALL   STREET   POINT   OF   VIEW. 

use  Bacon's  words,  unless  he  sees  the  means  of  paying  the  usury 
and  realizing  a  surplus  besides.  Another  reason  assigned  in 
the  catalogue  of  Bacon's  "discommodities"  is  "that  usury  doth 
dull  and  damp  all  industries,  improvements,  and  new  inven- 
tions, wherein  money  would  be  stirring  if  it  were  not  for  this 
slug." 

This  is  a  peculiar  view  of  the  results  of  borrowing.  Conse- 
quences seem  to  be  largely  the  contrary  in  our  day.  This  power 
to  borrow  infuses  activity  into  all  the  channels  of  industry  and 
invention  in  which  money  is  employed.  Many  of  the  project- 
ors of  our  modern  "  sky-scrapers,"  for  instance,  can  usually 
realize  three  or  four  per  cent,  profit  between  the  money  bor- 
rowed and  that  expended  on  the  buildings.  Of  course  it 
changes  the  nature  of  the  transaction  if  the  interest  is  larger 
than  the  profits  of  the  business,  but  there  are  very  few  so 
foolish  as  to  borrow  under  such  conditions  and  at  such  ruinous 
rates. 

Viewing  the  obverse  side  of  the  picture,  however,  Bacon's 
theories  are  more  in  consonance  with  present  commercial  prac- 
tice and  experience.  But  they  all  go  to  show,  more  or  less, 
how  narrow  the  basis  of  business,  trade,  and  commerce  was  in 
the  golden  age  of  Queen  Elizabeth  and  James  the  First,  about 
three  centuries  ago,  and  they  bring  out  in  bolder  relief  the  great 
progress  that  has  been  made  since  that  time. 

Bacon  goes  on  to  show  that  were  it  not  for  borrowing, 
"  men's  necessities  would  draw  upon  them  a  most  sudden  un- 
doing ;  "  and  he  concludes  that  "  it  is  a  vanity  to  conceive  that 
there  would  be  ordinary  borrowing  without  profit,  and  it  is  im- 
possible to  conceive  the  number  of  inconveniences  that  would 
ensue  if  borrowing  be  cramped.  Therefore,  to  speak  of  the 
abolishing  of  usury  is  idle.  All  states  have  ever  had  it,  in  one 
kind  or  rate  or  other ;  so  that  opinion  must  be  sent  to  Utopia." 

Such  were  the  opinions  of  the  great  philosopher  who  has 
gained  the  credit  of  creating  a  revolution  in  scientific  thought 
and  who  was  chiefly  instrumental  in  reducing  the  philosophic 
theories  of  centuries  to  the  practical  basis  which  has  been  at  the 
bottom  of  all  modern  invention  and  discovery.  "  The  key  to 


MONEY   AND   USURY.  17 

the  Baconian  system  of  philosophy,"  says  a  great  writer,  "  was 
utility  and  progress,"  and  these  have  brought  into  being  a  world 
of  business  enterprise,  and  need  for  freedom  in  its  transaction, 
not  dreamed  of  in  his  time.  The  day  is  not  far  distant,  I 
believe,  when  money  will  be  bought  and  sold  and  rented  out 
with  as  little  restriction  upon  the  parties  to  the  contract  as  that 
pertaining  to  any  other  commodity. 


CHAPTER   IV. 

THE   RAILROAD   PROBLEM. 

Present  status  of  railroads,  and  indispensable  reforms  in  their  management 

—  Legislative   requirements.  —  Railroad  business  as  a  gauge  of  pros- 
perity. —  Ten  millions  of  people   depending  on  them  for  a  living.  — 
Suggestions  upon  consolidation. —  Hints  for  the  regulation  of  directors. 

—  President  Ingalls's  views  on  the  evils  of  railroad  management. 

THE  present  status  of  railroads  and  the  reforms  necessary 
in  their  management,  together  with  the  legislation  requi- 
site to  help  to  bring  about  these  reforms,  constitute  one  of 
the  subjects  of  most  extensive  interest  in  this  country  at  the 
present  day.  When  railroads  are  prosperous,  the  whole  country 
is  prosperous,  and  not  less  than  a  seventh  part  of  the  popula- 
tion of  the  country  is  depending  almost  directly  on  them 
for  a  living.  Therefore  if  such  a  calamity  could  be  sup- 
posed as  would  bring  the  railroads  to  a  standstill  not  less 
than  ten  millions  of  people  out  of  the  seventy  would  be  almost 
immediately  brought  face  to  face  with  all  the  horrors  of  famine. 

Certain  Western  legislators  never  seem  to  think  of  this  when 
they  are  doing  their  best  to  drive  the  railroads  in  their  various 
localities  out  of  business  or  into  bankruptcy,  nor  does  it  ever 
seem  to  occur  to  these  Solons  that  they  themselves  would  be 
among  the  greatest  sufferers  by  the  strict  execution  of  the  laws 
which  they  are  annually  striving  to  promulgate. 

One  of  the  first  things  that  Congress  should  deal  with,  and 
that  without  delay,  as  regards  the  railroad  problem,  is  the  en- 
actment of  a  pooling  bill  that  will  allow  freedom  of  contract 
between  and  among  railroad  corporations.  If  there  were  a 
well-defined  and  liberal  national  law  to  this  effect,  then  the  State 
legislatures  would  be  powerless  to  shackle  commerce,  for  the 
Constitution  of  the  United  States  makes  full  provision  against 

18 


THE   RAILROAD   PROBLEM.  19 

such  interference  in  Article  I.,  section  10,  clause  i,  which  says: 
"  No  state  shall  make  any  law  impairing  the  obligation  of  con- 
tracts." This  clause  in  the  Constitution  would  squelch  all  the 
vicious  attempts  of  the  anarchistic  railroad-wrecking  legislators 
throughout  the  entire  West,  or  wherever  the  spirit  of  populism 
might  desire  to  destroy  property  and  rob  the  owners  thereof  of 
their  just  rights. 

The  loose  and  somewhat  hostile  laws  of  Congress,  and  their 
still  more  hostile  interpretation  by  the  Supreme  Court,  in  one 
instance  at  least,  have  hitherto  stood  in  the  way  of  the  applica- 
tion of  this  clause  in  the  Constitution  against  mischievous  State 
legislation  in  the  matter  of  railroad  corporations.  Hence  the 
necessity  of  a  national  law  to  make  effective  this  constitutional 
provision  which  the  Fathers  in  their  wisdom  inserted  in  the 
supreme  law  of  the  land,  in  the  interest  of  personal  freedom, 
and  to  conserve  the  rights  of  private  property. 

The  question  of  railroad  consolidation  is  one  that  is  largely 
occupying  the  minds  of  railroad  managers,  and  those  who  have 
large  interests  in  railroad  securities.  One  railroad  magnate  of 
great  experience  in  building  railroads  and  saddling  most  of  the 
expenses  on  the  government,  thinks  that  it  would  be  a  good 
thing  if  consolidation  were  carried  so  far  as  to  concentrate  the 
whole  railroad  property  of  the  country  in  the  hands  of  not  more 
than  three  corporations.  What  a  tremendous  number  of  rotten 
organizations  this  one  would  contain,  —  probably  enough  to 
wreck  them  all !  In  such  an  arrangement  many  wealthy  and 
well-to-do  stockholders  would  in  all  probability  be  reduced  to 
poverty,  and  ultimately  the  three  big  concerns  might  have  to 
go  into  the  hands  of  receivers,  thus  throwing  the  great  aggre- 
gate system  into  bankruptcy. 

Consolidation  cannot  fail  to  be  beneficial  where  connecting 
roads  extend  on  parallel  lines,  and  all  are  naturally  working 
toward  the  same  end  ;  namely,  the  transportation  of  freight  and 
passengers  from  one  prominent  and  opulent  town  to  another. 
Particularly  is  this  the  case  where  some  rich  valley  or  system  of 
valleys  indicates  the  course  of  travel  and  commerce  between 
these  points  ;  and  for  an  illustration  we  may  take  the  New  York 


20  THE   WALL   STREET   POINT   OF   VIEW. 

Central,  which  is  the  most  brilliant  instance  of  successful  rail- 
way consolidation  known  in  the  United  States. 

At  the  time  when  this  arrangement  was  effected,  the  plan  of 
introducing  branch  roads  from  comparatively  thinly  settled  and 
barren  districts  had  not  been  exploited  to  any  noticeable  extent, 
nor  has  this  particular  road  favored  such  a  plan.  Its  acquisi- 
tion of  the  ill-starred  West  Shore  Road  was  a  necessity ;  it  was 
consummated  with  reluctance,  and  only  because  the  directors 
believed  that  the  destinies  of  our  imperial  State  would  eventu- 
ally grow  in  opulence  sufficiently  to  make  the  transaction  pro- 
ductive. It  was  legitimate  because  it  "  had  to  be,"  and  there 
is  no  danger  of  such  another  enterprise.  The  topographical 
formation  of  the  State  is  such  that  no  competing  trunk  road 
can  be  laid  between  Albany  and  Buffalo,  and  no  capital  or 
charter  could  be  procured  to  construct  a  fourth  line  between 
New  York  City  and  Albany.  Both  sides  of  the  Hudson  River 
are  now  occupied,  and  the  Harlem  road  is  sufficient  for  the 
rich  and  level  counties  that  extend  between  the  eastern  bank 
of  the  Hudson  and  New  England.  The  system,  therefore,  is, 
humanly  speaking,  complete ;  and,  although  on  its  central  and 
westward  divisions  it  may  yet  absorb  laterals,  its  comparative 
permanency  and  necessary  conservatism  tend  to  give  it  the 
confidence  of  investors,  and  to  make  it  as  it  has  been  termed, 
"  the  '  consol '  of  the  market." 

It  strengthens  our  position  that  while  this  great  process  of 
consolidation  took  place,  attended  by  a  continual  increase  of 
market  value  of  shares,  two  other  roads  —  one  partly,  the  other 
wholly  in  the  same  State  —  which  attempted  absorptions  equal 
in  magnitude,  but  wanting  in  the  elements  of  prudence  and 
rationality,  experienced  such  depressions  of  share  values  as  seri- 
ously to  disturb  the  money  market  and  ruin  thousands  of  small 
holders.  The  stock  of  one  of  these  great  roads  sank  to  30^  in 
1877;  that  of  the  other  to  25^.  Both  have  since  recovered 
to  above  par,  but  the  operation  has  been  slow  and  painful,  and 
during  a  period  of  years  their  stocks  were  footballs  and  specu- 
lative traps,  the  tools  of  gamblers,  instead  of  the  useful  servants 
of  the  community,  and  the  secure  refuges  of  finance. 


THE   RAILROAD   PROBLEM.  21 

When  we  go  westward  and  look  at  the  outcome  of  consolida- 
tion, we  find  different  conditions  and  less  prosperous  results. 
The  real  logic  of  the  case  has  been  neglected  or  contemptuously 
thrust  aside,  and  steps  have  been  taken  which  no  arguments 
could  justify.  The  directors  of  the  main  lines  in  these  cases 
have  proceeded  not  in  the  direction  of  the  interests  of  their 
stockholders,  but  in  that  of  bargains  and  deals  with  the  officers 
of  unprofitable  connecting  and  lateral  roads  on  the  principle 
of  spoliation  and  a  division  of  the  spoils. 

These  transactions  have  been  numerous  and  of  enormous 
magnitude,  but  they  have  been  all  pretty  much  alike,  so  that 
when  we  describe  one  we  describe  all.  Given,  a  useful,  well- 
constructed  dividend-paying  road ;  a  body  of  people  with  some 
capital  and  political  influence  aided  by  some  of  the  directors 
of  this  prosperous  line ;  these  construct  a  branch  road  to  some 
outside  point,  —  the  more  important  such  point  the  better,  but 
that  is  of  small  consequence.  The  road  gets  itself  built,  it  is 
bonded  for  more  than  it  cost,  and  it  cost  twice  as  much  as  it 
ought,  since  the  constructors  were  all  together  in  the  ring  and 
favored  one  another.  Then  the  capital  stock  is  fixed  at  so 
much,  and  this  is  mostly  distributed  among  the  constructors. 
The  road  then,  swelled  to  a  fictitious  price  of  three  or  four  to 
one,  and  not  worth  much  to  start  with,  is  ripe  for  absorption 
and  consolidation.  Its  directors  and  those  of  the  main  line 
meet,  confer,  and  vote  the  measure  through.  They  all  profit 
by  it,  more  or  less,  but  their  profits  are  enormously  in  excess  of 
the  trifling  losses  due  to  the  shrinkage  of  values  of  the  shares 
of  the  main  line.  A  director  of  the  main  line  may  perhaps  lose 
$20,000  on  a  thousand  shares,  but  what  is  that  when  compared 
to  a  gain  of  hundreds  of  thousands  in  his  holdings  of  the  branch 
road  whose  liabilities  are  assumed  by  his  victimized  corporation  ? 
Such  a  director  would  not  be  equal  to  the  demands  of  his 
covetousness  if  he  had  not  sold  thousands  of  shares  short,  in 
anticipation  of  the  fall  which  the  transactions  of  himself  and 
his  associates  were  inevitably  bound  to  produce. 

This  is  not  a  fanciful  picture.  On  any  railroad  map  the 
expert  in  railway  affairs  can  trace  out  such  main  lines,  each 


22  THE   WALL   STREET   POINT   OF  VIEW. 

with  its  connecting  branches  or  suckers,  many  of  them  worthless 
and  many  others  worse  than  worthless,  which  lose  themselves 
at  the  further  end  in  hypothetical  towns  and  barren  wilder- 
nesses, and  are  all  grouped  together  under  the  specious  names 
of  former  profitable  and  well-managed  railroads.  A  road  may 
have  been  originally  the  A.  &  B.  and  have  paid  full  dividends, 
so  full  that  it  may  have  been  advisable  to  double  the  volume 
of  stock  in  order  to  keep  the  price  of  shares  at  something  like 
par,  but  not  too  much  above  it.  Even  when  thus  watered  it 
has  been  excellent  property,  safe  for  investors,  desirable  col- 
lateral for  bank  loans,  creditable  to  its  managers,  and  useful  to 
the  public.  To-day  it  masquerades  under  the  name  of  A.  & 
B.,  or  perhaps  A.  B.  &  C.,  but  it  is  not  either,  because  it  is  so 
much  more.  It  has  swallowed  so  many  indigestible  morsels 
of  useless  and  unprofitable  branches  that  all  the  letters  of  the 
alphabet  would  be  required  to  particularize  them  ;  it  has  guar- 
anteed all  their  bonds,  and  has  exchanged  its  own  scrip  for 
theirs,  so  that  its  own  share  of  capital  is  in  excess  of  value  to 
that  extent  that  it  represents  only  the  phantom  equity  that 
trails  along  at  the  heels  of  a  fourth  or  fifth  mortgage.  The 
shares  that  were  once  a  firm  property  at  par  are  tossed  about 
the  market  at  all  prices  from  70  to  20  ;  dividends  are  scaled 
down  from  7  per  cent,  to  4,  then  2,  then  passed  temporarily, 
then  passed  indefinitely ;  a  floating  debt  of  unknown  amount  is 
created;  its  paper  —  known  as  "railroad  paper"  —  is  to  be 
found  by  the  ream  in  the  portfolios  of  note  brokers ;  and  when 
it  fails  to  get  itself  sold  at  6  or  8  per  cent,  it  lets  itself  out  at  10 
or  12.  Capitalists  and  banks  are  invited  to  make  bids  on  pri- 
vate terms.  Every  banker  knows  that  railroad  paper  is  fre- 
quently negotiated  at  18  per  cent.,  and  although  the  proceeds 
ostensibly  go  to  bona-fide  holders  for  value,  no  one  doubts  that 
the  treasury  of  the  road  that  makes  such  ruinous  discount  of 
future  earnings  is  the  real  borrower.  Then  come  income 
bonds, "  subordinated  and  unsubordinated,"  debenture  bonds, 
all  the  delusive  schemes  on  which  bankrupt  concerns  float  along, 
until  receivers  are  appointed  and  honest  management  is  en- 
forced. The  court  imposes  an  assessment,  and  it  is  announced 


THE   RAILROAD   PROBLEM.  23 

as  a  great  success  that  the  A.  B.  &  C.  is  now  earning  fixed 
charges  ! 

Such  is  consolidation  run  mad,  and  such  is  its  tendency  when 
not  restrained  by  natural  causes  or  by  honesty  on  the  part  of 
managers.  Can  we  expect  any  other  results  ? 

And  speaking  of  honesty  on  the  part  of  managers  brings  me 
to  another  important  part  of  the  subject  under  consideration. 
That  is  the  necessity  of  a  protective  system  of  committees, 
chosen  by  the  stockholders  of  every  railroad,  to  investigate  the 
management,  have  its  accounts  audited  periodically  by  trust- 
worthy experts  upon  a  plan  that  would  exclude  the  possibility 
of  collusion,  and  have  the  reports  of  these  committees  reported 
to  a  central  association,  also  chosen  by  said  stockholders,  at 
reasonable  intervals.  This  would  in  time  reform  and  thor- 
oughly eradicate  most  of  the  evils  now  complained  of,  and 
make  the  railroads  still  more  potent  instruments  for  developing 
material  prosperity  through  our  unlimited  resources. 

In  a  discourse  by  M.  E.  Ingalls,  President  of  the  "  Big  Four," 
C.C.C.  &  St.  Louis  Railway,  delivered  at  Purdue  University, 
Indiana,  many  of  the  evils  of  railroad  management,  and  the 
needed  reforms,  are  set  forth  in  a  very  succinct  manner,  and 
exhibit  the  thorough  grasp  that  Mr.  Ingalls  has  taken  of  the 
subject.  After  adverting  to  the  immense  increase  and  power 
of  these  properties,  and  showing  what  they  have  done  for  the 
nation  in  affording  greater  facilities  for  travel,  decreasing  freight 
rates  on  the  average  to  four  fifths  of  a  cent  per  ton  per  mile, 
and  on  the  great  products  such  as  wheat,  corn,  cotton,  iron,  and 
coal  to  half  this  rate,  he  goes  on  to  show  that  after  the  panic  of 
1857,  stocks  of  many  of  the  railroads  that  had  formerly  been 
paying  dividends  went  down  to  10,  and  in  some  instances  5 
cents  on  the  dollar.  He  then  describes  the  advent  and 
methods  of  the  promoter  who  obtained  charters,  issued  stocks 
and  bonds  on  prospective  roads,  and  how  the  holders  of  these 
presumable  securities  felt  when  the  day  of  reckoning  came  and 
they  were  unable  to  meet  the  interest.  It  was  in  this  state  of 
affairs  that  Western  hostility  was  engendered  toward  promoters 
and  contractors  and  railroad  managers  in  general,  and  thus  the 


24  THE   WALL   STREET   POINT   OF   VIEW. 

Granger  movement  of  the  seventies  had  its  origin.  After  it  had 
spent  its  force,  Congress  passed  the  Interstate  Commerce  Law 
in  1886,  making  the  difficulties  even  greater  than  did  the  State 
laws.  By  this  law,  pooling  or  the  division  of  business  in  certain 
equitable  proportions  was  prohibited ;  while  it  is  the  judgment 
of  railroad  managers  that  in  no  other  way  than  by  such  divisions 
can  permanent  and  fair  rates  be  obtained.  One  effect  of  the 
law  is  that  the  big  shippers  can  evade  it  and  undersell  the  small 
shippers,  driving  them  out  of  business ;  and  the  same  rule 
holds  with  communities,  —  the  building  up  of  Chicago,  for 
instance,  and  the  breaking  down  of  places  like  Lafayette. 

Mr.  Ingalls  advises  that  it  is  necessary  to  build  five  thousand 
miles  a  year  in  short  and  inexpensive  lines,  as  feeders  to  the 
main  systems.  He  concludes  that  in  a  few  years  we  will  re- 
quire two  hundred  and  fifty  thousand  miles  of  main  lines  to 
accommodate  one  hundred  million  population,  which  will  be 
an  increase  of  40  per  cent,  over  the  present  mileage.  But  we 
require  new  legislation  of  a  fairly  liberal  character  to  achieve 
this  end. 

One  point  in  Mr.  Ingalls's  recommendations  is  worthy  of 
special  note ;  that  is,  the  issue  of  debenture  bonds  on  the  Eng- 
lish plan  instead  of  mortgages.  This  would  put  a  stop  to  the 
immense  reorganizations  which  during  the  past  few  years  have 
involved  one  fifth  of  the  whole  railroad  property  of  the  coun- 
try, and  would  prevent  the  stockholders  from  being  wiped  out 
in  times  of  trouble.  There  is  no  foreclosure  in  England.  When 
the  company  defaults  on  the  interest  of  the  debentures,  a  re- 
ceiver is  appointed  to  take  care  of  the  profits,  but  the  stock- 
holders retain  their  interest  in  the  property. 

It  is  easy  to  see,  therefore,  that  if  we  should  adopt  the  Eng- 
lish system,  the  occupation  of  our  numerous  railroad  wreckers 
would  be  gone  ;  and  if  they  should  turn  their  attention  to  the 
calling  of  the  highwayman,  it  would  involve  a  considerable 
enlargement  of  our  prison  accommodation.  In  their  new 
occupation  they  could  hardly  count  on  the  immunity  that  is 
now  extended  to  them  by  the  custom  which  has  been  in  vogue 
for  forty  years,  gaining  strength  and  power  all  the  time. 


THE   RAILROAD   PROBLEM.  25 

I  am  glad  to  find  that  the  plan  of  extension  which  I  have 
been  advocating  in  the  newspapers  and  periodicals  for  years  in 
preference  to  that  of  consolidation,  is  commended  by  Mr. 
Ingalls.  The  operation  of  consolidating  down  to  two  or  three 
corporations,  or  probably  one,  as  Mr.  Huntington  recommends 
(in  the  belief  perhaps  that  the  Pacific  roads  should  be  the 
nucleus  of  the  one),  would  in  all  probability  result  in  govern- 
ment ownership.  This  would  suppress  competition,  deteriorate 
values,  rob  many  thousands  of  stockholders  of  a  portion  of  their 
property,  and  destroy  the  chief  stimulus  for  railroad  extension 
and  railroad  enterprise,  thus  throwing  a  wet  blanket  on  every 
kind  of  business  connected  with  railroad  traffic,  —  and  what 
business  is  not  so  connected?  In  fact,  it  would  probably 
create  one  of  the  worst  panics  we  have  ever  experienced ;  and 
finally  it  would  greatly  embarrass  the  government  itself,  which 
would  not  be  able  to  make  railroad  revenues  and  expenses 
balance.  Then  would  come  the  oppression  of  extra  taxation, 
either  in  the  shape  of  an  addition  to  the  internal  revenue 
already  swelled  to  unreasonable  proportions,  or  perhaps  an 
income  tax. 

There  would  be  no  end  to  the  trouble  caused  by  the  govern- 
ment ownership  of  railroads.  But  there  is  no  chance  for  such 
a  consummation  in  this  generation. 


CHAPTER  V. 

MANAGEMENT  OF  OUR   INDUSTRIAL  ENTERPRISES. 

The  relation  of  the  financial  management  of  these  institutions  to  their 
success  or  failure.  — They  should  be  compelled  to  make  periodical  state- 
ments of  their  condition  as  quasi-public  concerns.  — The  origin  of  cor- 
porations and  their  beneficent  purposes. — They  are  powerful  in  the 
present  day,  if  properly  managed,  for  the  production  of  wealth  and  the 
promotion  of  the  best  interests  of  society.  —  A  public  and  periodical 
system  recommended  for  the  examination  of  accounts  by  experts  trained 
for  the  purpose.  —  Under  proper  management,  the  whole  community 
might  share  in  the  great  advantages  which  these  industrials  are  capable 
of  conferring  on  the  public  at  large. 

IN  considering  the  great  subject  of  industrial  enterprises,  the 
first  thing  that  naturally  strikes  the  prudent  man  of  general 
business,  is  the  character  of  the  financial  management  of  these 
institutions. 

Usually,  the  management  is  most  faulty  in  its  failure  to 
make  periodical  statements  of  their  condition,  and  the  favored 
few  in  the  inner  confidence  of  the  managers  have  advantages 
in  the  general  market  to  which  they  are  not  justly  entitled. 

The  fact  that  industrials  are  possessed  of  double  attributes, 
of  public  and  private  nature  combined,  opens  the  way  to  abuse 
of  official  power,  which  may  frequently  happen  with  an  honest 
purpose  but  with  an  intense  desire  to  assert  private  indepen- 
dence against  what  may  be  regarded  as  public  intermeddling 
with  private  affairs.  An  inability  to  perceive  fine  distinctions 
between  two  sets  of  obligations  of  this  dual  character  and  the 
natural  tendency  in  human  nature  to  follow  the  selfish  purpose 
in  the  first  instance,  may  lead  to  official  delinquency  toward 
the  public  interests,  where  the  original  intention  was  only  a 
matter  of  self-assertion  or  a  sensitive  desire  to  stand  upon 
personal  dignity  and  personal  rights.  But  after  such  a  habit 

26 


MANAGEMENT  OF   INDUSTRIAL   ENTERPRISES.      27 

of  action  has  been  some  time  indulged,  it  may  assume  a  grosser 
aspect  in  which  delicacy  of  feeling  and  lofty  notions  of  self- 
respect  play  but  little  part,  the  change  in  the  man's  nature  or 
the  management's  nature  and  principles  having  been  wrought 
through  an  appeal  to  his  avaricious  propensities,  and  so  blunt- 
ing his  perceptions  that  he  becomes  incapable  of  drawing  a  fine 
distinction  between  meum  et  tuum. 

Unfortunately,  it  is  such  a  spirit  that  pervades  the  manage- 
ment of  many  of  these  industrials,  in  consequence  of  which 
they  have  been  viciously  deflected  from  their  true  intent  and 
purpose.  This  deflection  has  occurred  through  ignorance  of 
the  end  in  view,  or  in.  forgetfulness  that  to  aim  at  the  greatest 
good  is  often  the  best  means  of  attaining  one's  own  individual 
benefit.  In  truth,  avarice  is  seldom  capable  of  adopting  any 
broad  view,  and  this  vice  is  one  of  the  worst  influences  with 
which  the  industrials  have  had  to  contend,  and  there  seems 
to  be  but  one  power  that  can  prevent  its  invading  both  public 
and  private  rights.  I  have  no  contention  with  those  who  hold 
the  doctrine  of  moral  suasion  in  cases  of  this  kind ;  I  am  con- 
sidering the  practical  phase  of  the  subject,  and  I  fear  that 
nothing  but  the  strong  arm  of  the  law  will  be  found  satisfac- 
torily effective.  Of  course  the  moral  sense  is  an  important 
factor  to  cultivate  in  maintaining  the  laws  of  society  and 
business  equity,  but  where  this  quality  becomes  atrophied,  as 
in  many  cases  of  industrial  management,  the  ends  of  justice 
require  firmer  measures  of  reform. 

In  plain  terms,  it  is  utterly  useless  to  preach  the  moral  law 
to  a  man  who  has  an  idea  that  he  is  doing  an  able  and  meri- 
torious act  in  laying  schemes  to  plunder  his  neighbor  in  a  way 
that  the  latter  cannot  detect  or  expose  because  the  methods 
adopted  are  such  as  the  public  have  been  taught  to  think  con- 
sistent with  good  business  methods.  Nor  will  the  doctrine  of 
passive  submission  help  that  neighbor  to  secure  his  rights.  It 
will  only  render  him  more  liable  to  be  victimized. 

The  corporation  idea  when  applied  to  industrial  enterprises 
was,  and  is,  calculated  to  confer  the  greatest  benefits  on  hu- 
manity that  human  ingenuity  and  energy  can  bestow.  Rightly 


28  THE  WALL   STREET   POINT   OF  VIEW. 

applied,  it  is  the  most  effective  instrument  for  moving  the  forces 
that  produce  wealth  and  happiness ;  and  there  is  no  happiness 
in  poverty  nor  morality  in  destitution,  no  matter  what  theorists 
may  say.  The  existence  of  the  corporation  is  absolutely  nec- 
essary in  this  age  of  progress  and  development,  to  give  inven- 
tions a  chance  of  exhibiting  their  capacity  and  of  conferring 
their  illimitable  boons  and  blessings  upon  mankind.  It  enables 
an  aggregate  of  individuals  to  put  their  capital  and  energy 
together  so  as  to  act  as  one  gigantic  individual  and  to  over- 
come obstacles  that  can  be  put  aside  by  no  other  means.  It  is 
the  practical  faith  in  our  day  and  generation  that  removes 
mountains. 

But  still  this  naturally  benevolent  giant  is  not  infrequently 
possessed  by  the  vile  demon  of  avarice  to  which  I  have  just 
referred,  and  the  problem  is  how  to  exorcise  the  demon.  Our 
legislative  machinery  should,  in  my  opinion,  be  equal  to  this 
task.  The  periodic  examinations  of  the  financial  management 
of  all  industrial  enterprises  can  readily  be  made  effective  to  cut 
off  the  opportunity  for  plunder.  I  admit  that  this  treatment  is 
suggestive  of  very  radical  measures ;  but  "  desperate  cases  re- 
quire desperate  remedies  "  is  a  medical  adage  quite  applicable 
to  business  maladies. 

Now  comes  the  most  delicate  part  of  my  task.  There  is  no 
use  in  firing  bullets  in  the  air  and  losing  ammunition  upon 
game  that  is  beyond  our  range.  We  must  give  cases  in  point, 
rather  than  generalities ;  we  must  point  out  the  very  concerns 
in  which  the  faulty  secretiveness  exists,  and  without  beating 
about  the  bush.  A  few  of  the  most  conspicuous  of  these  are 
briefly  termed  in  the  everyday  language  of  the  stock  exchange  : 
"  Tobacco,"  "  Leather,"  "  Whiskey,"  "  Ice,"  and  "  Sugar." 

If  these,  and  others  similar  to  them,  had  been  subjected  to 
the  ordeal  of  a  thorough  investigation  by  expert  accountants, 
and  their  true  financial  condition  laid  before  the  public,  an 
innumerable  number  of  serious  losses  would  have  been  pre- 
vented from  falling  upon  innocent  and  worthy  people,  nor 
would  the  enterprises  in  question  have  been  exposed  to  the 
reproach  now  cast  upon  them  by  victims  and  others. 


MANAGEMENT   OF   INDUSTRIAL  ENTERPRISES.      29 

Some  people  draw  a  distinction  between  dishonest  and 
unwise  methods  in  the  financial  management  of  such  prop- 
erties, and  many  methods  are  indeed  unwise  without  being  at 
all  dishonest  or  criminal.  Ultimately,  however,  they  wreck 
the  property  just  the  same  as  in  the  cases  of  Cordage, 
Whiskey,  and  of  numerous  railroads,  a  mere  catalogue  of 
which  would  extend  this  chapter  far  beyond  the  limits  of  its 
allotment. 

There  are  also  many  in  the  railroad  list  furnishing  illustra- 
tions of  similarly  faulty  financial  methods.  Some  of  these  have 
exhibited  peculiar  methods,  if  not  delinquencies,  in  bookkeep- 
ing, which  should  have  undergone  more  rigid  investigation  than 
they  have  received;  and  the  guilty  parties  should  have  been 
held  responsible  for  their  acts,  which  brought  about  the  finan- 
cial downfall  of  so  many  great  railway  corporations  in  the 
memorable  panic  of  1893. 

The  investigation  of  the  refunding  committee  of  the  Pacific 
railroads  at  Washington  brought  out  most  remarkable  evidence 
from  one  of  the  principal  witnesses,  who  stated  that  the  books 
connected  with  the  construction  of  the  road  had  been  burned 
or  destroyed  as  useless  trash  involving  the  superfluous  expense 
of  room  rent,  though  they  contained  the  record  of  transactions 
involving  hundreds  of  millions  of  dollars,  a  record  which  became 
absolutely  necessary  to  a  fair  settlement  between  the  govern- 
ment and  its  debtors.  Also,  the  fact  was  put  in  evidence  that  a 
certain  party  in  interest  had  testified  before  another  committee, 
on  a  former  occasion,  that  he  was  present  when  $54,000,000 
of  profits  were  divided  equally  among  four  partners,  himself 
and  three  others.  None  of  the  books  of  record  containing  this 
valuable  information  escaped  from  the  flames. 

Now,  under  a  system  of  public  examination  as  often  as  once 
a  year  at  least,  by  experts  trained  for  that  special  purpose,  no 
such  valuable  evidence  could  be  destroyed,  and  I  believe  that 
industrials  would  be  capable  of  fulfilling  the  highest  aims  of 
their  beneficent  purpose  as  originally  conceived  by  their  first 
organizers ;  that  is,  to  cheapen  production,  in  order  that  con- 
sumers might  reap  by  far  the  larger  portion  of  the  profits 


30  THE   WALL   STREET   POINT   OF   VIEW. 

derivable  from  this  cause,  after  a  fair  remuneration  to  manage- 
ment and  shareholders. 

Though  it  would  take  volumes  to  ventilate  this  subject  fully, 
yet  I  think  the  matters  to  which  I  have  referred  and  the  means 
of  reform  which  I  have  suggested,  strike  at  the  root  of  some  of 
the  worst  abuses  relating  to  the  speculative  management  and 
manipulation  of  industrial  securities.  The  "  scoops "  which 
have  become  so  frequent  and  so  terrible  a  scandal  in  specu- 
lative circles,  and  which  have  brought  such  unmerited  odium 
on  the  legitimate  business  of  Wall  Street,  would  be  hardly  pos- 
sible under  a  system  of  surveillance  with  a  syndicate  of  expert, 
honest,  responsible  accountants  as  the  keystone  of  its  arch,  and 
under  government  or  state  supervision. 

The  more  attentively  and  closely  this  subject  is  examined, 
the  more  clearly  does  it  appear  that  the  place  of  financial 
management  in  the  industrial  organization  largely  determines 
its  success  or  failure.  The  power  and  ability  of  the  capital  to 
increase  are  liable  to  be  crippled  in  every  attempt  if  the 
financial  management  is  slow  to  perceive  the  requirements  for 
this  end.  The  surplus  must  be  carefully  watched,  and  not 
wasted  in  superfluous  expenses ;  for  it  is  through  the  persistent 
law  of  aggregation  by  means  of  the  surplus  that  the  industrial 
concern  achieves  its  great  development  and  expansion  over 
other  methods  of  enterprise. 

Not  the  least  important  advantage  resulting  from  prudent, 
honest,  and  capable  management  is  in  preventing  state  inter- 
ference beyond  the  limits  of  salutary  supervision,  as  before 
indicated,  and  in  leaving  no  excuse  for  state  control,  which 
might  prove  destructive  of  the  highest  aims  of  the  legitimate 
industrial,  and  deprive  it  of  its  greatest  potentialities. 


CHAPTER   VI. 

CONCERNING  TRUSTS  AND  CORPORATIONS. 

Trusts  are  transformed  into  corporations  and  doing  business  legally.  — 
How  corporations  with  large  aggregations  of  capital  make  everything 
cheaper  for  consumers  and  purchasers  generally.  — Amazing  decline  in 
prices  and  railroad  rates,  while  wages  are  higher  than  ever  and  the 
number  of  employes  increased.  — The  power  of  consolidations  and  cor- 
porations for  increasing  wealth,  national  and  private,  and  making  every- 
body more  prosperous.  —  Interesting  confession  of  F.  B.  Thurber,  the 
ci-devant  anti-monopolist.  —  He  gives  cogent  reasons  for  his  change  of 
heart,  and  shows  the  great  benefits  corporations  confer  upon  the  people. 
Farmers  and  cotton  growers  more  prosperous  than  ever,  and  why  ?  — 
Cooperation  the  coming  power  in  the  competitive  struggle,  which  will 
also  solve  the  problem  of  socialism.  —  Enough  of  remedial  legislation 
already  provided  to  give  relief  in  almost  any  supposable  case. 

TRUSTS,  as  such,  are  virtually  things  of  the  past.  Those 
who  are  fighting  them  now  are  merely  battling  against  the 
wind,  for  the  so-called  trusts  have  nearly  all  been  reorganized  as 
corporations,  and  as  such  are  now  presumably  perfectly  legal,  if 
they  ever  were  otherwise  ;  for  investigating  committees  created 
for  the  purpose  of  finding  causes  or  excuses  to  dismember,  dislo- 
cate, and  otherwise  maltreat  these  institutions,  have  been  thus 
far  powerless  to  accomplish  their  purposes.  What  they  have 
achieved  in  the  way  of  side  issues,  I  do  not  know ;  but  it  would 
be  unfortunate  if  all  their  arduous  labor  and  patriotic  exertions 
to  protect  the  people  from  some  imaginary  foe  should  have 
been  spent  in  vain.  When  now  they  clutch  ferociously  at  a 
trust,  as  Macbeth  grappled  desperately  for  the  dagger  in  the 
air,  behold,  it  has  vanished,  and  become  metamorphosed  into 
another  thing,  called  a  corporation,  which  the  law  expressly 
allows,  and  which,  instead  of  being  in  restraint  of  trade,  has 
been  wisely  designed  for  the  promotion  of  prosperity  and  gen- 
Si 


32  THE   WALL   STREET   POINT   OF  VIEW. 

eral  business,  in  which  the  entire  community  will  share;  and 
instead,  therefore,  of  the  trust  being  "  against  public  policy," 
the  corporation  is  right  in  the  line  of  that  policy,  and  calcu- 
lated to  confer  the  greatest  good  on  the  greatest  number. 

These  important  changes  in  the  programmes  of  the  trusts 
might  wisely  have  been  discovered  before  the  special  committee 
of  New  York  was  appointed  on  this  subject,  thus  saving  money 
to  the  treasury  of  this  State ;  but  that  is  a  question  between  the 
people  and  their  representatives.  If  the  former  want  informa- 
tion in  this  expensive  manner  and  are  willing  to  be  taxed  to 
pay  for  it,  that  is  their  right ;  but  I  cannot  help  thinking  that  if 
we  had  the  Swiss  referendum,  and  the  people  were  fully  in- 
formed thereby  as  to  what  their  money  was  being  spent  for, 
they  would  be  likely  to  object. 

In  the  formation  of  a  corporation  men  have  a  right  to  com- 
bine or  unite  their  capital,  skill,  knowledge,  and  experience  for 
the  purpose  of  engaging  in  the  manufacture  or  sale  of  any  article 
of  commerce  that  the  community  may  require,  and  which  is 
not  injurious  to  the  health,  happiness,  and  general  comfort  of 
the  people.  These  business  institutions  may  be  organized  in 
any  State,  without  violating  the  law  or  infringing  the  rights,  of 
any  citizen.  There  need  be  no  conspiracy  about  the  operation 
unless  the  parties  to  the  agreement  prefer  plotting  and  doing 
things  in  secret  which  can  just  as  well  be  transacted  openly ; 
hut  it  is  hardly  likely  that  Catilines  would  be  found  in  great 
abundance  among  men  whose  chief  desire  is  to  form  a  kind  of 
partnership  for  doing  a  legitimate  business. 

As  a  matter  of  fact  and  of  history,  the  combinations  called 
"  trusts,"  wherever  backed  by  large  capital,  expert  skill,  and 
great  business  ability,  have  conferred  material  benefit  on  the 
community  at  large  and  almost  invariably  insured  the  promo- 
tion of  prosperity  on  a  durable  basis.  They  have  furnished  the 
people  with  many  of  the  commodities  of  civilized  existence  at 
much  lower  prices  than  formerly,  not  only  without  decreasing 
the  wages  of  labor,  but  in  many  instances  increasing  them,  and 
eventually  extending  the  field  for  a  larger  number  of  employe's. 

Sugar,  india-rubber   goods,  tobacco,   leather,  and   a  great 


CONCERNING  TRUSTS  AND  CORPORATIONS.   33 

variety  of  other  commodities  are  cheaper  than  at  any  former 
period  of  the, country's  existence,  and  wages  are  higher  here 
to-day  than  ever  they  have  been  except  in  war  times  ;  in  fact, 
almost  double  those  paid  in  any  other  country. 

As  long  as  these  corporations,  combinations,  trusts,  or  what- 
ever people  may  choose  to  call  them,  furnish  the  community 
with  goods  cheaper  than  they  can  be  obtained  elsewhere,  and 
do  so  within  the  lines  of  the  law,  they  not  only  may  be  endured, 
but  instead  of  being  a  curse  to  society,  as  some  people  seem  to 
regard  them,  can  be  safely  looked  upon  as  a  great  blessing.  It 
may  happen  that  a  few  people  will  at  first  be  incommoded  by 
their  methods  of  doing  business,  but  it  is  difficult  to  effect  any 
change  or  improvement  for  the  good  of  the  many  which  will 
not  cause  temporary  inconvenience,  and,  in  some  instances, 
suffering,  to  a  few. 

Now,  it  is  easy  to  discern  that  the  young  and  ambitious  man 
with  moderate  or  perhaps  small  capital  who  aspires  to  go  into 
business  for  himself  finds  his  way  barred  by  these  corporations. 
He  cannot  compete  with  them.  The  only  resource  for  young 
men  of  some  capital  who  contemplate  business  careers  is  to 
get  together  and  form  combinations  of  their  own.  Nothing  can 
compete  successfully  with  combinations  except  new  combina- 
tions, and  these  will  put  new  life  and  energy  into  the  general 
cooperative  movement. 

Cooperation  needs  no  socialistic  impetus.  It  can  start  on 
the  present  foundation  which  civilization,  however  imperfect 
thus  far,  has  laid,  and  go  on  building  up  with  the  best  materials 
it  can  command.  Brain  is  as  important  as  capital,  and  those 
who  serve  the  people  best  will  win.  If,  then,  secure  in  their 
monopoly,  their  service  deteriorates,  new  rivals  will  not  be  lack- 
ing to  displace  them.  This  point  is  generally  overlooked  by 
those  who  pose  as  anti-monopolists :  that  when  the  so-called 
monopoly  begins  to  advance  the  price,  it  immediately  invites 
competition  for  which  the  brains  and  the  capital  will  be  ready 
as  soon  as  the  profits  of  the  business  are  large  enough  to  arouse 
cupidity. 

Of  course  the  corporations  already  in  the  field,  composed  of 
D 


34  THE  WALL   STREET  POINT   OF   VIEW. 

a  few  members,  or  which  combine  now  or  shall  combine  in  the 
future  with  comparatively  few  members,  have  some  advantage 
over  the  new  cooperationists  with  presumably  smaller  capital ; 
but  it  has  been  demonstrated  in  Great  Britain  that  such  coop- 
eration can  be  made  to  compete  with  most  of  the  big  moneyed 
concerns  in  existence. 

Similar  conditions  prevail  in  farming  as  those  adverted  to  in 
the  case  of  corporations.  A  young  man  going  West  would  be 
foolish  if  he  undertook  alone  to  cope  with  established  methods. 
He  would  find  at  the  end  of  his  first  harvest  that  the  sale  of  his 
crops  had  not  come  near  to  covering  the  expense  of  production, 
and  probably  that  the  very  necessities  which  the  farm  and  the 
garden  had  supplied  to  his  own  table  had  cost  him  about  twice 
the  amount  for  which  he  could  have  bought  them  in  the  next 
market  town.  The  mammoth  appliances  made  necessary  by 
the  latest  inventions  in  the  art  of  agriculture  have  rendered  in- 
dividual enterprise  with  small  capital  almost  futile,  and  such 
attempts  at  competition  ridiculous.  Without  the  means  of 
keeping  abreast  of  the  times  in  the  art  of  invention  and  being 
able  to  procure  the  latest  labor-saving  machinery,  competition 
is  out  of  the  question  in  farming  as  in  many  other  pursuits.  So 
the  advice  of  Horace  Greeley,  "  Go  West,  young  man,"  has  no 
longer  the  significance  it  possessed  when  that  veteran  journalist 
and  philosopher  was  in  the  habit  of  imparting  it. 

Railroads  afford  the  most  conspicuous  example  of  the  forma- 
tion of  big  corporations  with  which  no  individual  power  can 
compete ;  and  even  where  governments  in  Europe  have  tried 
to  compete  they  have  failed  to  make  money.  It  is  to  be 
hoped  that  the  experiment  will  never  be  tried  here,  as  there  is 
no  necessity  for  taxing  the  people  to  invest  their  money  in 
enterprises  that  would  be  almost  certain  to  leave  the  taxation 
a  permanent  burden  on  the  country. 

One  of  the  most  significant  examples  of  change  of  heart  as 
to  the  morale  of  railroad  corporations  and  combinations  was 
afforded  in  the  testimony  of  Mr.  F.  B.  Thurber  before  the  Lexow 
committee.  About  a  dozen  years  ago  he  was  a  leader  among 
an  ti- monopolists,  and  spent  about  $100,000  in  printer's  ink, 


CONCERNING  TRUSTS  AND  CORPORATIONS.  35 

paper,  and  otherwise,  in  addition  to  much  valuable  time  in 
opposing  trusts,  monopolies,  combinations,  and  corporations. 
After  the  experiment  had  cost  him  a  vast  deal,  he  discovered 
that  many  of  the  combinations  which  he  had  been  so  strenu- 
ously opposing,  while  working  in  their  own  selfish  interests, 
were  also  doing  great  work  for  the  benefit  of  the  whole  com- 
munity. They  had  builded  much  better  than  either  they  or 
Mr.  Thurber  knew,  though  their  building  was  all  the  result  of 
efforts  for  self-aggrandizemdnt. 

This  is  an  important  illustration  of  the  principle,  that  in  the 
aggregation  of  wealth  devoted  to  the  promotion  and  develop- 
ment of  great  enterprises  for  the  purpose  of  enriching  its  mem- 
bers and  with  little  or  no  desire  on  their  part  to  benefit  the 
many,  the  latter  have  one  of  the  best  guaranties  possible  that 
they  will  be  taken  care  of.  Wealth  cannot  possibly  combine 
and  go  into  any  business  that  will  largely  increase  its  returns 
without  conferring  much  greater  benefits  upon  the  community 
than  if  the  wealth  in  question  had  remained  in  its  isolated 
fragments  where  it  would  in  all  probability  have  been  spent 
without  any  extensive  distribution. 

The  aggregate  is  likely  to  be  directed  by  chosen  brain  power, 
skill,  and  experience,  and  is  almost  certain  to  increase  and  mul- 
tiply by  the  innate  power  and  conditions  of  its  very  existence 
and  employment. 

Apropos  of  this  benign  and  universal  principle,  which  seems 
to  work  about  as  independently  of  the  purposes  and  desires  of 
interested  individuals  as  the  law  of  gravitation,  I  here  introduce 
the  testimony  of  Mr.  Thurber  in  corroboration  of  this  and  other 
matters  of  interest  on  the  point  at  issue.  It  must  be  regarded 
as  disinterested  in  view  of  his  former  attitude,  and  he  is  a  man 
of  great  intelligence,  well  versed  in  politics  and  economics,  of 
thorough  practical  capacity,  an  expert  accountant,  and  possessed 
of  extraordinary  executive  ability  in  business,  so  that  his  con- 
clusions, based  on  his  protracted  experience  and  irrefragable 
statistics,  can  hardly  be  erroneous.  When  on  the  stand  he 
referred  to  the  fact  that  the  consolidation  of  railroad  organiza- 
tions was  the  most  conspicuous  example  of  the  working  of  the 


36  THE  WALL   STREET   POINT   OF  VIEW. 

so-called   trusts.     Explaining  the  success  of  this  experiment, 
and  the  former  fears  excited  by  it,  Mr.  Thurber  said  :  — 

"  There  was  a  fear  in  the  public  mind,  in  which  I  shared,  that 
these  combinations  and  consolidations  would  result  in  exorbitant 
rates  for  transportation  and  to  the  detriment  of  the  public  interest. 
What  the  result  has  been  is  shown  by  the  following  extract  from  a 
report  adopted  by  the  National  Board  of  Trade  at  its  annual  con- 
vention in  1896:  '  The  average  charge  for  sending  a  ton  of  freight 
one  mile  on  thirteen  of  the  most  important  railroads  in  the  United 
States  during  1865  was  3.08  cents;  in  1870,  1.80  cents;  in  1875, 
i. 36  cents;  in  1880,  i.oi  cents;  in  1885,0.83  cents;  in  1890,0.77 
cents;  in  1893,  0.76  cents;  in  1894,  0.746  cents,  and,  in  1895, 
0.720  cents.  These  railroads  performed  one-third  of  the  entire 
transportation  of  1893,  and,  from  the  figures  given,  it  appears  that 
0.72  cents  would  pay  for  as  much  transportation  over  their  lines  in 
1895  as  could  have  been  obtained  for  3.08  cents  thirty  years 
earlier.1 " 

The  witness  produced  a  tabular  statement  showing  the  influ- 
ence of  the  Standard  Oil  combination  on  the  prices  of  refined 
illuminating  oils,  per  gallon,  exported  from  the  United  States, 
1871  to  1896.  The  prices  represent  the  market  value  of  article 
at  time  of  exportation  :  — 

1871 25.7 

1875 14-1 

1880 8.6 

1885 8.7 

1890 7-4 

1895 4-9 

1896 6.8 

He  also  produced  the  following  table,  showing  the  variations 
in  the  price  of  sugar  for  a  number  of  years  :  — 


CONCERNING  TRUSTS  AND  CORPORATIONS.   37 


Cents  per  pound. 

Average  price. 

Centrifugals 
(raw). 

Granulated 
(refined). 

Difference. 

l87Q     . 

7.4.27 

8.781; 

1.362 

188? 

5.729 

C./l/IT 

.712 

1887      . 

C.24.C 

6.013 

.768 

Average  9  years  .     . 
1888     

6.807 
C.74.9 

7.905 

7.OO7 

1.098 
I  258 

1800    . 

MCI 

7**V 

6.171 

7  2O 

1801     , 

3.689 

4..S4.2 

1.  1C? 

1891; 

3.21:8 

4.I4O 

.882 

1896     . 

3.631 

4.C29 

.908 

Average  9  years   .     . 

4.291 

5.272 

.96l 

On  the  general  principles  of  aggregation,  as  he  has  found 
them,  Mr.  Thurber  testified  :  — 

"  A  combination  of  capital  in  any  line  temporarily  exacts  a  liberal 
profit ;  immediately  capital  flows  into  that  channel,  another  combi- 
nation is  formed,  and  competition  ensues  on  a  scale  and  operates 
with  an  intensity  far  beyond  anything  that  is  possible  on  a  smaller 
scale,  resulting  in  the  breaking  down  of  the  combination  and  the 
decline  of  profits  to  a  minimum.  The  only  trusts  which  have  suc- 
ceeded for  any  length  of  time  have  been  those  which  have  been 
conducted  on  a  far-sighted  basis  of  moderate  margins  of  profit, 
relying  upon  a  large  turnover,  and  the  economies  resulting  from  the 
command  of  large  capital  intelligently  administered.  The  truth  of 
this  is  illustrated  by  innumerable  failures  in  trust  organizations, 
recent  Illustrations  of  which  are  the  Strawboard  Trust,  the  Starch 
Trust,  the  Wire  Nail  Trust,  and  the  Steel  Trust.  There  are  trusts 
so-called  in  nearly  every  branch  of  business,  and  there  are  good  and 
bad  in  all,  but  the  good  so  far  predominates  that  such  aggregations 
of  capital  should  be  encouraged  accompanied  by  safeguards  against 
abuses.  The  only  additional  safeguards  needed  are  for  stockholders 
and  investors,  whose  interests  are  often  sacrificed  through  lack  of 
publicity.  So  far  as  the  interest  of  consumers  is  concerned,  it  is 
amply  protected  now ;  first,  by  competition,  as  I  have  shown,  and, 
second,  by  the  common  law,  which,  if  invoked,  will  nullify  any  con- 
tract in  restraint  of  trade,  and  under  existing  statutes  any  unreason- 
able combination  is  subject  to  indictment  for  conspiracy. 


38  THE   WALL   STREET   POINT   OF  VIEW. 

"The  popular  hostility  to  trusts  is  due  principally  to  lack  of 
knowledge  of  their  economic  effects,  and  these  are  gradually 
becoming  better  known.  There  were  just  enough  abuses  attending 
them  to  give  an  excuse  for  sensational  journalistic  denunciation, 
and  this  has  caused  undue  prejudice.  A  great  politico-economic 
question  like  this  should  be  considered  dispassionately  and  all  sides 
of  it  carefully  investigated  before  conclusions  are  reached.  The 
result  of  my  many  years'  study  of  it  has  been  to  modify  materially 
the  views  I  entertained  in  the  beginning. 

"  While  within  the  limits  of  a  hearing  like  this  it  is  impossible 
to  discuss  exhaustively  all  the  varying  phases  of  so  large  a  subject, 
I  have  endeavored  to  present  to  your  committee  the  thoughts 
which  have  come  to  me  in  a  somewhat  extended  observation  and 
study  of  the  phenomena  attending  the  great  economic  revolution 
now  in  process  of  development,  with  the  hope  that  they  may  have 
suggested  some  points  which  are  worthy  of  further  consideration 
and  which  may  aid  your  committee  in  arriving  at  wise  conclusions." 

Senator  Lexovv  wished  to  know  whether  the  witness  favored 
legislative  supervision  of  prices.  In  answer  to  questions,  Mr. 
Thurber  said  that  he  believed  that  competition  against  the 
American  Sugar  Company  was  increasing  and  would  continue 
to  increase. 

Mr.  Thurber  did  some  sums  in  arithmetic  to  show  that  the 
price  of  granulated  sugar  was  6.77  cents  per  pound  for  five 
years  preceding  the  Trust,  and  for  the  first  five  years  subsequent 
it  was  5.97. 

"Do  not  the  large  dividends,"  asked  the  Assemblyman 
Mazet,  "  prove  that  the  consumer  does  not  get  the  whole  bene- 
fit?" 

"  Certainly,"  was  the  reply. 

"  In  my  own  business,"  he  said,  "  I  would  never  again  incor- 
porate if  it  could  be  carried  on  individually."  He  admitted 
that  speculation  in  stocks  was  possible  when  they  were  listed, 
but  added  that  thousands  of  corporations  did  not  list  their 
stocks.  He  cited  the  Standard  Oil  Company  as  a  conspicuous 
example  of  a  company  whose  stock  was  not  used  for  specula- 
tion. 


CONCERNING  TRUSTS  AND   CORPORATIONS.      39 

One  of  the  most  important  points  in  the  testimony  of  Mr. 
Searles,  the  Secretary  of  the  American  Sugar  Refining  Com- 
pany, in  favor  of  the  plan  of  combination,  was  that  which  he 
gave  regarding  the  way  in  which  consumers  were  benefited  by 
the  competition  of  the  company  against  London  speculators. 
He  was  very  positive  as  to  the  evil  arising  from  the  attempt  of 
legislation  to  drive  capital  from  the  State,  and  contended  that 
combinations  were  more  helpful  than  injurious  to  the  interests 
of  labor.  He  said  :  — 

"  Our  prices  are  controlled  largely  by  the  London  market,  which 
is  distinctly  a  speculative  market.  The  speculators  there  speculate 
against  the  needs  of  the  world.  They  say  that  the  American  Sugar 
Refining  Company  will  have  to  have  so  much  sugar.  We  will 
hold  this  sugar  until  we  make  them  pay  our  price.  This  is  specula- 
tion against  our  country's  need  for  the  commodity.  Now,  with  our 
vast  capital,  we  have  been  able  to  go  to  other  markets ;  we  have 
been  able  to  go  to  the  uttermost  parts  of  the  earth,  and  to  purchase 
our  supply  before  it  got  into  the  hands  of  this  speculative  market. 
In  that  way  we  have  time  and  time  again  beaten  that  market  out, 
and  the  price  of  sugar  has  thus  been  kept  low.  If  in  place  of  this 
great  combination  of  ours,  this  aggregation  of  capital,  there  had 
been  fifteen  or  twenty  smaller  concerns,  no  one  of  them  would  have 
been  able  to  go  to  the  lengths  that  we  were  able  to  go,  and  they 
would  all  have  been  held  up  by  the  London  speculators.  This  is 
one  of  the  most  important  of  the  benefits  that  the  consumer  has 
received." 

He  was  asked  whether  he  thought  that  his  organization  was 
a  philanthropic  organization,  and  answered  :  — 

"  I  have  distinctly  stated  to  you  that  we  are  in  no  wise  a  philan- 
thropic organization.  We  are  an  organization  in  business  for  the 
purpose  of  making  money.  We  find  that  the  greatest  profit  is  in  the 
reduction  of  the  price  of  our  commodity  to  the  lowest  possible  point, 
because  that  very  largely  increases  the  consumption.  Where  we 
make  less  a  pound  we  make  more  pounds  and  more  profit.  In  tell- 
ing you  the  advantages  of  this  combination,  however,  I  have 
omitted  to  tell  you  one  of  the  most  important  things  of  all  —  that 
is,  the  value  of  the  combination  of  technical  knowledge  and  the 
ability  of  the  people  who  conducted  the  business  when  it  was  cut 


40  THE   WALL   STREET   POINT   OF  VIEW. 

up.  At  the  time  that  the  trust  was  organized  each  concern  had 
appliances  that  were  considered  secret.  All  of  them  were  of  con- 
siderable value.  When  the  trust  was  organized,  and  the  heads  of 
the  various  concerns  came  together,  all  of  these  valuable  appliances 
were  combined,  and  their  use  was  extended  to  all  the  plants. 
There  was  a  combination  of  all  the  knowledge  and  the  technical 
skill,  and  it  was  all  utilized  for  the  common  good." 

When  asked  if  combinations  of  capital  made  labor  suffer,  he 
replied :  — 

"They  certainly  do  not.  There  is  a  law,  let  me  tell  you,  sir, 
higher  than  the  State  of  New  York.  That  is  the  law  of  supply  and 
demand.  No  trust  has  ever  been  yet  organized,  no  corporation  has 
ever  been  created,  and  there  never  has  been  any  combination  of 
capital  of  any  sort  big  enough  to  violate  that  law.  As  I  told  you, 
hundreds  of  millions  of  dollars  are  in  New  York  waiting  to  be  put 
into  industrial  pursuits ;  but  if  all  the  hundreds  of  millions  were 
put  in  one  industry,  the  violation  of  the  law  of  supply  and  demand 
would  bring  about  the  destruction  of  all  the  wealth.  The  consumer 
is  amply  protected  by  the  operation  of  this  law,  just  as  the  combi- 
nation of  capital  is  held  in  check  by  it." 

I  think  the  best  and  strongest  side  of  the  so-called  "  trusts  "  is 
very  ably  and  clearly  stated  in  these  two  citations.  It  may  be 
said  that  Mr.  Searles  is  an  interested  party,  but  the  same  criti- 
cism will  not  hold  good  in  the  case  of  Mr.  Thurber  ;  for  while 
admitting  the  success  of  the  principle  of  combination  and  its 
soundness  in  theory,  he  still  seems  to  adhere  inwardly  to  his 
old  love  of  individual  independence  in  doing  business.  This 
would  seem  to  amount  to  the  fact  that  he  does  not  love  his 
share  of  the  combination  profits  less,  but  his  individuality 
more,  and  does  not  in  any  respect  shake  the  force  of  his 
opinion  and  arguments  in  favor  of  the  combination  scheme  of 
doing  business. 

The  prices  to  which  the  products  of  these  corporations  have 
been  reduced  in  a  comparatively  short  time,  leave  the  oppo- 
nents of  the  consolidation  methods  without  any  solid  ground  to 
stand  upon.  The  chief  argument  used  from  time  immemorial 


CONCERNING  TRUSTS  AND  CORPORATIONS.  41 

has  been  the  danger  of  the  corporations  charging  exorbitant 
prices  when  they  are  able  to  control  the  situation ;  but  except 
in  a  few  isolated  instances,  which  are  the  exceptions  that  only 
prove  the  rule,  they  do  not  succeed  in  controlling  the  situation, 
and  the  foregoing  statistics  of  constantly  declining  prices  are 
the  best  answers  to  all  such  objections  and  fallacious  arguments. 
Would  any  of  the  objectors  to  railroad  consolidation  wish  to 
go  back  thirty  years  and  pay  three  cents  per  ton  per  mile 
instead  of  three  quarters  of  a  cent,  for  the  sake  of  having  the 
corporation  system  changed  into  the  old  plan  of  individual 
ownership  and  competition?  To  state  this  question  clearly  is 
to  answer  it.  Would  anybody,  except  a  few  people  on  Staten 
Island,  who  have  been  born  there,  lived  to  a  ripe  old  age,  and 
expect  to  die  there,  as  some  of  their  ancestors  have  done,  with- 
out ever  seeing  New  York,  agree  to  go  back  to  the  old  pas- 
senger rates,  with  all  the  inconvenience  attending  the  system  ? 
No.  People  who  are  in  the  habit  of  using  railroads  do  not 
wish  to  go  back  to  the  conditions  which  prevailed  thirty  years 
ago,  and  which,  without  corporations,  would  doubtless  prevail 
still  to  a  very  considerable  degree.  People  in  general,  in  all 
lines  of  business,  are  better  off  now  than  then.  If  the  changes 
at  first  threw  some  out  of  employment,  the  improvement  and 
extension  in  almost  every  sphere  of  human  energy  and  indus- 
try have  ultimately  given  employment  to  many  times  more  than 
suffered  any  deprivation  from  the  change  which  brought  gen- 
eral prosperity. 

Some  people,  it  is  true,  may  have  suffered  temporarily  from 
this  very  prosperity,  which  included  in  its  capacious  scope  the 
cheapening  of  all  products  by  improved  machinery.  The 
farmers  have  occasionally  been  complaining  as  sufferers  from 
this  cause,  and  under  the  bad  advice  of  selfish  politicians  and 
ignorant  legislators  have  been  instrumental  in  causing  much 
mischief  and  seriously  retarding  the  growth  and  advancement 
of  some  of  the  western  and  northwestern  States ;  but  the  mal- 
contents, in  this  province  of  industry,  are  now  reduced  to  a  few 
impotent  and  harmless  grumblers,  who  have  not  been  able  to 
take  advantage  of  the  progress  and  discovery  of  the  age,  and 


42  THE   WALL   STREET   POINT   OF   VIEW. 

think  that  the  march  of  intellect  and  invention  should  wait 
until  they  get  sufficiently  animated  to  join  the  procession. 
Such  processions,  however,  do  not  wait  on  laggards.  They  are 
on  forced  marches  to  wider  and  more  promising  fields  of  dis- 
covery, and  the  laggards  must  take  care  of  themselves  as  best 
they  can,  or  suffer  the  consequences.  Surely  the  farmer  is 
better  off  to-day  with  wheat  70  cents  a  bushel  in  Chicago  than 
he  or  his  predecessor  was  during  the  period  prior  to  the  war, 
say  from  1855  to  1860  inclusive,  when  the  average  price  for  six 
years  was  $1.69,  and  the  highest  in  1855,  $2.43^.  When  he 
takes  into  account  the  reduction  in  transportation  charges,  the 
facilities  for  much  larger  production,  and  the  cheaper  rates  at 
which  he  can  buy  everything  he  needs  (under  a  Republican 
administration,  at  least),  he  is  in  a  much  better  position  than 
his  father  or  his  grandfather  was  in  ante-bellum  times  when, 
not  "George  IV.  was  king,"  but  General  Jackson;  or  at  more 
recent  dates  which  we  could  name.  Farmers  are  better  off 
and  more  independent,  viewed  as  a  confraternity  or  brother- 
hood, than  any  other  secular  denomination  of  our  citizens; 
and  this  applies,  of  course,  in  especial  degree  to  those  who 
have  kept  abreast  of  the  times  in  making  use  of  modern 
inventions. 

Let  us  take  a  cursory  glance  at  the  cotton  planter,  for  in- 
stance. He  is  better  off  now  than  when  "cotton  was  king." 
Cotton  was  formerly  sold  at  9  to  10  cents  a  pound.  In  1833- 
1842  inclusive,  the  average  price  was  12  cents;  in  1843-1846, 
it  fell  to  6£,  but  again,  in  1855-1860,  it  rose  to  10^.  Now  it 
is  around  6£  and  7  cents,  and  occasionally  higher  or  lower. 
But  the  immense  increase  in  production  through  machinery, 
and  the  utilization  of  portions  of  the  product  that  were 
formerly  discarded  as  refuse,  such  as  cottonseed  oil,  coke, 
etc.,  by  which  means  the  producer  is  enabled  to  realize  about 
a  cent  and  a  half  per  pound,  brings  the  net  return  to  the  pro- 
ducer up  to  about  the  old  standard. 

It  seems  to  me,  so  far  as  the  corporations  are  concerned 
with  the  investigating  committees  of  this  State,  that  the  latter 
are  too  zealous  in  explaining  with  exactitude  the  letter  rather 


CONCERNING  TRUSTS  AND  CORPORATIONS.  43 

than  the  spirit  of  the  law.     Section  7,  relating  to  "combina- 
tions," for  instance,  reads  as  follows  :  — 

"  No  stock  corporation  shall  combine  with  any  other  corporation 
or  person  for  the  creation  of  a  monopoly  or  the  unlawful  restraint  of 
trade  or  for  the  prevention  of  competition  in  any  necessary  of  life." 

There  is  a  foot-note  to  this  section  in  the  statutes  which  reads 
thus : — 

"  This  section  is  not  intended  to  prevent  the  consolidation  of  cor- 
porations engaged  in  the  same  business. 

"  Cameron  v.  N.  Y.  &  M.  V.  Water  Company,  62  Hun.,  269. 
«  16  N.  Y.  Supp.,  757. 
"42  N.  Y.  St.  Rep.,  912." 

Now,  the  sugar  corporation  and  others  similarly  organized 
contend  that  they  have  rendered  full  compliance  with  the 
terms  of  this  section  and  in  accordance  with  the  decisions 
herein  cited.  They  allege  that  the  field  is  open  for  competi- 
tion, and  show,  as  in  the  case  of  the  London  speculators  in 
sugar  and  the  perpetual  formation  of  competing  sugar  corpora- 
tions, that  they  themselves  do  not  control  the  trade,  and  that, 
so  far  from  aiming  at  higher  prices,  they  have  consistently  held 
to  the  principle  in  theory  and  demonstrated  it  in  practice  that 
they  have  been  constantly  aiming  at  and  actually  reaching 
lower  prices,  and  that  in  the  success  of  this  operation  they 
have  found  their  highest  profits. 

Now,  where  do  the  objections  come  in,  if  these  conclusions 
are  demonstrable  ?  It  is  for  the  reader  to  see  whether  the  so- 
called  trusts  or  the  investigators  have  made  out  their  case.  I 
have  presented  their  best  arguments  as  plainly  as  I  know  how, 
and  I  leave  the  inference  to  the  reader. 

One  thing  appears  pretty  clear.  There  is  no  wrong  which 
these  corporations  are  capable  of  inflicting  for  which  either  the 
common  or  the  statute  law,  or  both,  do  not  provide  a  remedy, 
a  sufficiency  of  the  latter  for  this  purpose  being  already  on  the 
statute  books.  Then  why  require  more  laws  until  these  are 
tried  and  found  wanting? 


CHAPTER  VII. 

THE  ART  OF   MAKING  AND   SAVING   MONEY.1 

Numerous  opportunities  for  making  money.  —  How  to  embrace  them,  and 
how  to  begin  the  work  of  accumulation.  —  It  is  easier  to  make  than  to 
save  money.  —  The  small  beginnings  of  prominent  millionaires,  and  how 
they  made  their  fortunes.  —  Industry,  perseverance,  honesty,  and  thrift 
must  be  associated  with  the  methods  of  all  who  aspire  to  success  in  life. 
—  Necessity  has  been  the  great  stimulus  in  the  eminent  examples  here 
cited.  —  Prudence,  forethought,  and  sage  advice  required  for  successful 
investment.  —  Begin  right,  early  in  life. 

IT  does  not  require  a  great  genius  to  make  money.  The 
accumulation  of  wealth  is,  after  all,  an  easy  matter.  It 
does  not  require  education,  breeding,  or  gentle  manners,  and 
perhaps  even  less  than  people  imagine  has  luck  anything  to  do 
with  it.  Any  man  or  woman  may  become  wealthy,  if  he  or  she 
begins  aright.  The  opportunities  for  gathering  the  nimble 
dollar  are  very  numerous  in  this  country.  But  there  are  cer- 
tain fundamental  rules  that  must  be  observed. 

The  first  step  to  acquiring  a  fortune  lies  in  hard  work.  I 
could  give  you  no  better  advice  than  that  given  by  Poor  Rich- 
ard :  "  Save  something  each  day,  no  matter  how  little  you  earn." 
Cultivate  thrifty  habits.  Make  your  toil  count  for  all  that  you 
can.  Always  save  some  portion  of  your  wages,  and  then  be  on 
the  alert  for  investment.  If  you  do  this  wisely,  your  money 
will  begin  to  accumulate,  double,  treble,  and  in  a  few  years, 
perhaps,  you  may  be  a  millionaire. 

The  beginning  is  the  most  difficult.  lay  a  good  foundation 
for  your  fortune.  Be  brave,  be  generous,  be  helpful,  be  honest, 
do  not  overwork,  keep  in  good  health,  cultivate  your  mind,  be 

1  This  chapter  was  published  originally  in  an  article  in  the  Ladies'  Home 
Journal. 


THE  ART  OF  MAKING   AND   SAVING   MONEY.     45 

pure,  and  to  these  add  thrift,  and  you  need  not  fear.  You 
cannot  fail. 

I  would  say  to  all  fathers  and  mothers,  teach  your  children 
the  value  of  money.  When  they  are  old  enough,  make  them 
understand  the  worth  of  a  penny.  From  the  child's  savings- 
bank  in  the  play-room  to  the  millionaire's  bank  account  is  not 
a  long  step.  It  is  a  short  and  easy  span. 

Keep  a  bank  account. 

When  you  have  saved  one  hundred,  or  two  hundred,  or  five 
hundred  dollars,  look  about  for  a  good  investment.  Do  not 
take  up  this  or  that  scheme  at  a  venture,  but  examine  it  care- 
fully, and  if  you  see  your  way  clear,  put  your  money  into  it. 
Real  estate  is  usually  a  good  investment.  More  money  has 
been  made  in  real  estate  than  you  could  estimate  in  a  day.  A 
first  mortgage  is,  in  nine  cases  out  of  ten,  safe.  But  take 
advice  on  the  subject  before  you  invest.  Go  to  some  good 
conservative  man  and  get  his  views.  I  should  advise  the  same 
course  if  you  should  put  your  money  in  stocks  or  bonds,  or 
railway  shares.  In  fact,  I  should  urge,  before  you  invest  a 
penny,  that  you  get  the  best  counsel  on  the  subject  to  aid  you 
in  taking  the  right  course. 

If  your  first  investment  prospers,  by  careful  management, 
and  by  always  being  on  the  alert,  you  can  increase  your  fortune 
by  reinvesting  your  profits. 

A  man  who  had  only  a  few  hundred  dollars  left  out  of  a  for- 
tune, called  one  day  at  a  banking  house  and  asked  to  see  the 
manager,  who  was  a  man  of  conservative  mind  and  fully  ac- 
quainted with  the  best  and  most  profitable  investments.  Throw- 
ing down  his  roll  of  bank  notes,  he  said  :  "  Invest  this  for  me. 
Use  your  pleasure  with  it.  I'm  going  to  the  country  for  the 
remainder  of  the  summer.  I  will  leave  my  address  with  you, 
and  you  can  let  me  know  what  you  do  with  it."  The  man 
walked  out,  and  was  not  seen  again  for  many  months.  His 
money  was  judiciously  invested  on  his  carte  blanche  order,  and 
began  to  accumulate.  The  house  duly  informed  him,  accord- 
ing to  its  business  methods,  of  his  good  luck,  but  nothing  was 
heard  from  him  for  some  time.  Some  months  afterward  he 


46  THE  WALL   STREET   POINT   OF   VIEW. 

presented  himself  at  the  banking-house,  rosy  health  beaming 
in  his  face,  well  dressed  and  portly.  The  manager  failed  to 
recognize  him  at  first,  but  when  his  memory  was  refreshed  he 
recalled  the  circumstances  of  the  case.  This  was  an  example 
of  a  man  who  more  than  doubled  his  savings  by  simply  taking 
the  advice  of  an  experienced  and  reliable  man.  And  this  is 
not  an  exceptional  case. 

How  did  Samuel  J.  Tilden  attain  his  elevated  position  and 
immense  fortune  ?  Simply  by  the  exercise  of  thrift  and  indus- 
try, together  with  a  certain  degree  of  common  sense  ;  added  to 
the  capacity  for  taking  advantage  of  the  chances  thrown  in  his 
way,  and  his  cleverness  in  turning  them  to  the  best  account. 

It  will  not  do  for  any  one  to  sit  down  and  wait  for  the  com- 
ing of  wealth  and  fortune.  Industry,  persevering  and  untiring, 
is  essential  to  the  accumulation  of  money.  I  have  myself 
some  little  knowledge  of  the  toil  attendant  upon  the  amassing 
of  wealth,  and  I  have  the  highest  respect  and  sympathy  for  the 
man  who,  in  the  face  of  adverse  circumstances,  turns  his  pen- 
nies into  dollars,  and  his  dollars  into  millions. 

The  life  of  Commodore  Vanderbilt  affords  singular  scope  for 
reflection  on  the  immense  possibility  of  a  great  business  capa- 
city to  amass  a  great  fortune  in  a  few  years,  especially  in  this 
country.  From  being  the  possessor  of  a  row-boat  on  New  York 
Bay,  he  rose  in  sixty  years  to  be  the  possessor  of  $90,000,000. 
William  H.  Vanderbilt,  his  son,  obtained  $75,000,000  of  this, 
and  largely  increased  the  fortune  before  his  death. 

It  has  been  truly  said  that  any  fool  can  make  money,  but  it 
takes  a  wise  man  to  keep  it.  William  H.  Vanderbilt's  ability 
was  signally  displayed  in  keeping  intact  this  great  fortune, 
besides  adding  as  much  more  to  it.  I  make  special  mention 
of  Mr.  Vanderbilt  because  he  was  not  a  speculator,  in  the  true 
sense  of  that  term.  He  was,  first  and  for  all  time,  an  investor. 
And  every  man  in  this  great  Republic  has  the  privilege  of  walk- 
ing in  his  footsteps. 

Collis  P.  Huntington  came  to  New  York  when  a  boy  of  fif- 
teen, without  a  penny.  His  father  was  a  farmer  and  small 
manufacturer.  The  youth  early  showed  great  shrewdness  in  busi- 


THE  ART   OF  MAKING   AND  SAVING   MONEY.      47 

ness,  and  unlimited  energy  and  resolution.  But  success  is  not 
usually  attained  without  long  and  persistent  effort,  and  this  Mr. 
Huntington  found  to  be  the  case.  After  years  of  hard  work 
his  fortune  was  made,  and  now  he  is  worth  about  $30,000,000. 
He  is  still,  however,  a  hard  worker,  and  employs,  directly  or 
indirectly,  thirty  thousand  men. 

Leland  Stanford  received  an  academical  education  and  com- 
menced the  study  and  practice  of  law.  At  twenty-eight  years 
of  age,  a  fire  wiped  out  his  law  library  and  other  property, 
which  led  him  to  the  West  in  search  of  better  fortunes.  Here 
his  native  shrewdness  and  energy  asserted  itself,  and  soon  the 
dollars  began  to  multiply.  When  he  died  he  was  worth  from 
$25,000,000  to  $30,000,000. 

Darius  O.  Mills  is  one  of  the  most  notable  figures  daily  seen 
down  town  in  New  York.  He  was  born  in  a  small  town  on 
the  Hudson  River  some  sixty  years  ago,  and  began  life  in  very 
humble  circumstances.  His  courage  was  equal  to  that  of  a 
Richelieu,  and  his  caution,  conservatism,  energy,  and  industry 
were  all  fully  developed.  He  has  always  been  dependent  on 
his  own  exertions,  and  has  fought  his  way  up  in  life  by  sheer 
force  of  his  own  keen  intelligence  and  undaunted  enterprise. 
In  the  battle  of  life  he  has  achieved  signal  success.  He  is 
worth  about  $40,000,000. 

John  W.  Mackay  was  born  in  the  humblest  circumstances 
in  Dublin,  Ireland,  some  fifty-five  years  ago.  Coming  to  this 
country  very  early  in  life,  he  worked  for  a  time  on  board  ship. 
During  the  years  that  followed,  in  whatever  occupation  he 
engaged,  he  labored  industriously  and  faithfully.  He  saved 
his  money,  and  watched  his  opportunity,  which  so  very  few 
people  do.  He  is  now  twenty  times  a  millionaire,  and  all  by 
reason  of  hard  and  continuous  effort  and  thrift. 

The  late  James  C.  Flood  was  once  a  poor  boy  of  New  York 
City,  and  became  worth  more  millions  than  can  be  exactly 
estimated.  He  made  his  money  by  shrewd  and  successful 
investment,  and  by  the  exercise  of  energy,  self-reliance,  and 
thrift.  His  rise  was  remarkable,  but  he  showed  himself  equal 
to  the  surprising  good  fortune  which  attended  his  strange 


48  THE  WALL   STREET   POINT   OF   VIEW. 

career.  And  that  was  no  small  thing.  It  is  a  great  matter  to 
be  able  to  view  one's  success  without  any  untoward  feeling  of 
exultation. 

The  wealth  of  the  Astors  is  remarkable  for  the  way  it  has 
been  kept  intact,  and  for  the  steady  augmentation  which  is 
taking  place.  The  elder  Astor  made  a  mint  of  money  out  of 
the  fur  trade,  and  would  have  continued  in  that  business,  but 
he  found  that  investment  in  real  estate  was  vastly  more  profit- 
able. The  family  has  steadily  adhered  to  this  line  of  invest- 
ment through  four  generations. 

George  Peabody  was  a  poor  Massachusetts  boy  who,  by  hard 
industry,  rose  to  be  one  of  the  great  millionaires  of  his  day. 
His  fortune  at  one  time  exceeded  $10,000,000,  and  during  his 
lifetime  he  gave  away  more  than  $7,000,000  to  charitable 
purposes.  His  millions  were  acquired  by  the  saving  of  pennies, 
and  by  the  exercise  of  thrift,  honesty,  and  persevering  effort. 

Alexander  T.  Stewart,  "  the  merchant  prince,"  amassed  his 
millions  by  close  attention  to  business  and  by  the  aid  of  shrewd 
common  sense  and  thrift.  He  was  reputed  to  be  one  of  the  • 
three  wealthiest  men  in  the  United  States,  Commodore  Vander- 
bilt  and  John  Jacob  Astor  being  the  other  two.  He  left  an 
estate  exceeding  $25,000,000. 

Peter  Cooper  had  a  hard  time  getting  an  education.  He 
was  born  in  New  York,  one  hundred  years  ago,  and  at  the  age 
of  seventeen  was  apprenticed  to  a  shoemaker.  He  tried  his 
hand  at  several  trades,  and  got  together  a  comfortable  fortune 
of  about  $6,000,000,  through  unremitting  toil,  conscientious 
devotion  to  duty,  and  economical  habits. 

August  Belmont  came  to  New  York  poor,  and  lived  to  be 
worth  millions.  Prudence,  acuteness,  and  sagacity  were  the 
instruments  by  which  his  wealth  was  accumulated.  His  suc- 
cessful career  is  an  illustration  of  the  fact  that  this  country 
affords  a  fine  opportunity  for  the  intelligence,  thrift,  and  in- 
dustry, not  only  of  native  Americans,  but  of  the  Republic's 
adopted  citizens. 

Cyrus  W.  Field  is  another  apt  illustration.  He  has  been 
termed  a  locomotive  in  trousers.  The  simile  serves  to  convey 


THE   ART   OF   MAKING   AND   SAVING   MONEY.     49 

an  idea  of  the  indefatigable  energy  of  the  man.  His  indomi- 
table resolution  and  his  energy  of  character  placed  him  high 
among  the  distinguished  men  of  the  age. 

Vice-President  Morton  received  his  business  training  in  the 
dry-goods  trade.  Then  he  became  a  banker.  In  his  youth 
he  had  to  shift  for  himself.  Necessity  is  the  stimulus  that  men 
of  real  ability  require.  He  amassed  his  large  fortune  by  tire- 
less effort  and  the  exercise  of  shrewd  common  sense. 

Russell  Sage,  as  a  boy,  was  employed  in  a  village  store. 
His  business  aptitude  early  manifested  itself,  and  in  six  years 
he  bought  out  his  employer.  He  is  one  of  the  largest  capital- 
ists in  the  country,  and  all  his  millions  have  been  rolled  up  by 
energy  and  thrift. 

John  Wanamaker,  Chauncey  M.  Depew,  James  M.  Brown, 
Anthony  Drexel,  Moses  Taylor,  George  VV.  Childs,  J.  Pier- 
pont  Morgan,  and  a  host  of  others,  are  men  who  have  fought 
their  way  to  prominence  and  affluence  by  sheer  force  of  integ- 
rity, pluck,  intelligence,  and  industry. 

The  lives  of  all  the  men  mentioned  in  this  chapter  are  in- 
stances of  what  can  be  attained  by  any  boy  or  man  in  America. 
They  are  eloquent  testimony  of  the  truth  that  industry,  perse- 
verance, honesty,  and  thrift  can  accomplish  anything.  A  man 
who  is  wise,  careful,  and  conservative,  energetic,  persevering, 
and  tireless,  need  have  no  fear  of  his  future.  But  there  is  one 
other  thing.  He  must  have  a  steady  head,  one  that  can 
weather  the  rough  sea  of  reverses,  from  which  no  life  is  alto- 
gether free,  and  one  that  will  not  become  too  big  when  success 
attends  his  efforts. 

Keep  out  of  the  way  of  speculators.  Take  your  money, 
whether  it  be  much  or  little,  to  one  whose  reputation  will  insure 
you  good  counsel.  Invest  your  money  where  the  principal  is 
safe,  and  you  will  get  along. 

But  do  not  forget  the  acorns.  See  that  you  begin  aright 
early  in  life.  Save  your  money  with  regularity.  By  so  doing, 
you  will  more  than  save  your  money ;  you  will  make  money. 


CHAPTER  VIII. 

BUSINESS  EDUCATION. 

How  the  business  prospects  of  young  men  of  the  present  day  compare  with 
those  of  twenty-five  or  fifty  years  ago.  —  A  much  better  start  in  life  pos- 
sible now  than  then,  as  proved  by  historical  facts.  —  The  young  man  of 
to-day  as  compared  with  his  grandfather  at  the  same  age.  —  How  mil- 
lionaires of  old  were  made,  and  how  young  men  now  want  to  become  mil- 
lionaires by  jumping  over  the  intermediary  steps  and  omitting  the  hard 
work.  —  Certain  delusions  about  business  success  criticised  and  some 
cordial  advice  vouchsafed.  —  Opinions  old  and  new  on  college  and  clas- 
sical education  and  the  value  thereof  in  a  business  career.  —  Macaulay's 
views. 

THE  question  is  frequently  put  to  me :  "  Do  you  think  there 
are  as  good  chances  now  for  young  men  to  make  their  way 
in  life  and  for  some  of  them  to  become  wealthy,  as  in  the 
past,  say  from  a  quarter  to  half  a  century  ago?" 

Yes,  I  should  unhesitatingly  answer,  the  opportunities  are 
quite  as  favorable,  and  in  many  instances  much  more  so ;  but  as 
to  the  young  men  themselves,  that  is  the  question.  In  fact,  the 
start  in  life  for  a  young  man  fifteen  years  of  age  is  much  easier 
now  than  it  was  then.  For  instance,  the  parents  of  such  a 
youth  who  were  intent  upon  getting  him  a  start  in  an  office  in 
former  times  were  obliged  in  most  instances  to  pay  fifty  dollars 
the  first  year  for  the  privilege.  At  the  end  of  the  second  year 
he  received  fifty  dollars,  and  fifty  dollars  advance  for  every  year 
afterward  until  the  end  of  his  fifth  year,  which  completed  his 
preliminary  business  education,  or  rather  his  apprenticeship. 

Then,  of  course,  he  was  employed  according  to  his  value  as 
estimated  by  his  ability  and  the  use  which  he  had  made  of  his 
five  years'  experience.  Oar  young  man  of  the  present  day 
enjoys  the  distinction  of  entering  upon  business  without  any 

50 


BUSINESS   EDUCATION.  51 

idea  of  apprenticeship,  and  instead  of  his  parents  having  to 
advance  any  money  to  his  employer,  the  latter  gives  him  three 
dollars  a  week  to  start  with,  and  before  he  has  spent  two  years 
at  the  business  he  may  —  very  often  unwisely  —  strike  for  seven, 
ten,  or  perhaps  fifteen  dollars  a  week,  in  many  instances. 
These  aspirations  would  never  have  entered  the  head  of  his 
grandfather  before  he  had  attained  his  majority  and  cast  his 
first  vote,  while  he  never  knew  the  taste  of  tobacco,  much  less 
thought  of  "  pooling  for  drinks,"  as  many  of  the  young  office 
boys  do  now.  It  was  not  from  such  young  men  as  these,  but 
from  the  training  of  half  a  century  ago,  that  the  old  millionaires 
who  are  now  the  envy  of  our  young  men,  were  made. 

But  the  young  men  of  our  time  want  to  get  wealthy  suddenly. 
They  want  to  reach  the  goal  of  their  ambition  by  some  imagi- 
nary rapid-transit  route,  and  to  escape  the  toil  and  patient  wait- 
ing to  which  their  forefathers  were  subject. 

Science,  it  is  true,  has  made  rapid  strides  since  the  old 
fellows  laid  the  foundation  of  their  large  fortunes,  but  in  all  its 
discoveries  science  has  never  yet  found  the  method  of  dispens- 
ing with  toil  of  both  brain  and  muscle  in  the  incipient  stages  of 
accumulating  wealth. 

The  few  who  are  born  to  wealth  hardly  need  to  be  considered. 
The  accumulators  among  those  are  comparatively  few,  —  the 
Vanderbilts,  the  Goulds,  the  Astors,  and  a  few  others  in  the 
Western  world  being  conspicuous  exceptions  to  the  general  rule 
of  squandering  rather  than  augmenting  the  wealth  left  by  the 
hard-working  and  humble  ancestors.  In  Europe,  the  Roths- 
childs and  the  Barings  are  prominent  exceptions.  They,  too, 
made  more  of  what  was  left  them,  but,  in  the  majority  of  instances, 
the  proverbial  wings  seem  to  attach  themselves  magically  to 
the  hardest  earned  accumulations.  Most  frequently,  before  the 
third  generation  has  enjoyed  its  share,  and  often  sooner,  they 
are  recklessly  distributed  to  the  millions. 

This  law  of  distribution  affords  one  of  the  most  remarkable 
examples  of  the  irony  of  fate,  manifesting  its  workings  and 
results  by  inscrutable  methods.  In  the  periodical  distribution 
of  wealth,  the  highest  order  of  intelligence  rather  than  the 


52  THE   WALL   STREET   POINT   OF  VIEW. 

blind  happenings  of  chance  would  appear  to  be  behind  the 
active  and  mysterious  agencies  which  carry  out  what  seem  in 
most  instances  to  be  the  beneficent  designs  of  Providence.  No 
benevolent  institution  could  do  the  scattering  abroad  of  this 
surplus  wealth  in  a  more  general  or  a  more  equitable  manner, 
— no,  not  if  all  the  benevolent  institutions  in  the  country  should 
form  a  grand  trust  or  corporation  with  the  design  of  engag- 
ing in  the  dissemination  of  riches. 

Many  young  men,  as  well  as  some  old  ones,  are  under  the 
delusion  that  the  big  fortunes  now  in  existence  form  mountains 
in  the  path  of  modern  individual  enterprise,  which  can  never 
be  ascended  by  the  present  generation,  except  by  lucky  chances 
in  speculation,  such  being  the  methods,  as  they  presume,  by 
which  these  mountains  attained  their  present  altitudes.  Some 
of  the  more  foolish  ones  would  like  to  see  these  stupendous 
heights  above  the  surface  of  general  prosperity  demolished  by 
terrific  and  destructive  forces,  ignorant  or  unmindful  of  the  fact 
that  they  constitute  the  chief  fund  from  which  capital  is  drawn 
for  the  development  of  all  great  enterprises  and  for  the  advance- 
ment of  civilization. 

It  is  necessary  that  people  should  be  admonished  of  this  fact, 
especially  people  of  a  speculative  turn  of  mind,  as  the  delusion 
when  nurtured  is  liable  to  lead  its  possessor  into  all  kinds  of 
excesses  where  there  may  be  any  apparent  promise  of  profit. 
They  must  be  constantly  reminded  that  these  men  whose  pros- 
perous ventures  in  speculation  about  which  they  have  been 
reading,  had  long  and  toilsome  uphill  work  before  they  were 
able  to  approach  the  big  deals  in  speculation  and  investment 
for  which  they  became  celebrated.  They  should  read  the  text 
with  the  context.  For  instance,  when  they  reflect  with  great 
avidity  on  the  immense  stroke  of  luck  which  attended  the  bold 
speculations  of  the  eminent  sire  of  the  house  of  Vanderbilt, 
they  should  not  omit  the  account  of  his  hardships  for  a  living 
in  all  kinds  of  weather  in  Staten  Island  waters  in  a  row-boat,  to 
purchase  which  he  had  earned  the  money  by  digging  and  plant- 
ing, early  and  late,  a  potato  garden.  These  young  men,  how- 
ever, want  to  start  with  the  command  of  fleets  bearing  argosies 


BUSINESS   EDUCATION.  53 

to  and  from  every  foreign  shore,  as  the  Commodore  did  after- 
ward. But  they  must  go  through  the  old  preliminaries,  unless 
they  happen  to  be  sons  or  grandsons  of  others  like  him ;  even 
then  they  cannot  afford  constant,  luxurious  repose,  but  must 
look  diligently  after  the  wealth  of  which  they  are  virtually  only 
the  trustees. 

The  retention  and  increase  of  these  acquisitions  impose  a 
very  heavy  burden  on  the  mind,  which  only  a  few  are  able  to 
bear  without  breaking  down  as  Robert  Garrett  did. 

When  young  men  read  about  Jay  Gould  having  made  big 
deals  in  Erie  and  other  stocks,  and  a  fortune  sometimes  at  a 
bound,  by  getting  hold  of  two  or  more  broken-down  railroads, 
putting  them  together  and  making  a  good  one  out  of  them, 
perhaps  they  say  to  themselves,  "  Go  and  do  likewise."  But 
they  find  their  own  commands  hard  to  obey,  chiefly  because 
they  want  to  take  hold  of  that  million  of  dollars  at  once  without 
having  a  dollar  of  their  own,  and  when  they  fail  in  coming  up 
to  this  impossible  idea,  they  despair  of  doing  anything.  These 
over  sanguine  youths  might  find  some  consolation,  or  at  least 
a  salutary  lesson  in  humility,  by  turning  back  to  another  scene 
in  the  checkered  career  of  Mr.  Gould  when  he  was  working 
for  low  wages  in  a  country  grocery  store,  studying  at  night  the 
art  of  surveying,  and  even  in  his  sleep  dreaming  of  a  method 
of  increasing  his  small  earnings  by  the  invention  of  that  famous 
mouse-trap. 

If  the  youths  in  question  should  become  envious  of  old 
Daniel  Drew  when  they  think  of  the  time  that  he  made  millions 
in  Erie  by  his  paper-mill,  which  turned  out  the  certificates  of 
stock  faster  than  Vanderbilt  could  purchase  them  with  all  the 
money  he  could  command  and  borrow,  they  will  find  a  cooling 
and  tranquil  influence  exercised  on  the  passion  of  envy  when 
they  picture  this  fortunate  man  in  early  life,  when  he  was  a 
drover  suffering  untold  hardships  and  miseries,  driving  his 
cattle  from  the  West  over  the  Alleghany  Mountains  in  the  dead 
of  winter,  overtaken  by  snow-storms,  and  with  no  covering  to 
shield  him  from  the  blizzard. 

Instances  of  ordeals  of  similar  severity  in  the  lives  and  ex- 


54  THE   WALL   STREET   POINT  OF  VIEW. 

perience  of  the  greater  number  of  those  who  have  made  large 
fortunes  might  be  cited  in  sufficient  number  to  swell  this  vol- 
ume to  several  times  its  purposed  dimensions,  and  all  going  to 
show  that  these  men  have  been  nothing  but  hard-worked  helots 
for  the  benefit  of  others,  and  principally  for  the  benefit  and 
pleasure  of  posterity,  while  in  their  own  lives  they  were  con- 
stantly subjected  to  the  vilification  and  abuse  of  their  envious 
contemporaries. 

The  wealth-producers  in  question  are  in  general  the  uncon- 
scious and  undesigning  instruments,  in  the  economy  and  design 
of  nature,  for  human  evolution  to  a  higher  plane  of  existence. 
Without  them  it  would  seem  that  the  condition  we  term  civili- 
zation would  come  to  a  standstill  or  probably  retrograde.  As 
a  rule,  they  are  charmingly  unconscious  of  what  they  are  doing, 
but  their  works  follow  them  all  the  same. 

Such  are  still  the  chances  for  a  young  man  succeeding  in  life 
and  making  a  large  fortune ;  though,  after  all,  the  latter  should 
not  be  the  highest  object  of  human  ambition.  Success  depends, 
as  I  have  said  above,  on  the  young  man  himself.  Of  course, 
circumstances  may  either  favor  a  man  or  be  very  much  against 
him,  yet  favorable  circumstances  will  avail  little  or  nothing  if 
the  individual  himself  lacks  the  ability  to  take  advantage  of 
them.  If  a  man  has  sufficient  energy,  fixity  of  purpose,  pa- 
tience, self-denial  and  self-control,  frugality,  and  economy,  he 
can  acquire  a  competence,  or  a  moderate  fortune,  except  in 
those  rare  cases  where  sickness  or  misfortune  follow  him  so 
persistently  as  to  make  it  impossible ;  and  this  is  as  true  at  one 
period  of  the  world's  history  as  another.  It  was  the  case 
twenty,  thirty,  forty,  fifty  years  ago,  and  it  is  the  case  now ;  and 
just  so  it  will  be  fifty  years  or  a  century  from  now.  The  exer- 
cise of  the  qualities  that  win  fortune  will  win  it  in  any  age. 

No  young  man  should  ever  despair  or  be  discouraged  in  the 
pursuit  of  wealth  so  long  as  he  retains  the  full  use  of  his  facul- 
ties, provided  those  faculties  are  up  to  the  average.  That  is 
all  that  is  necessary.  It  does  not  require  a  genius  to  make  a 
fortune.  In  fact,  the  rare  individuals  with  genius  are  not  famous 
in  this  line  with  perhaps  the  exception  of  Thomas  A.  Edison 


BUSINESS   EDUCATION.  55 

and  a  few  others.  Geniuses  seem  to  know  things  by  instinct, 
except  the  secret  of  accumulating  wealth,  and  this  latter,  after 
all,  is  a  very  ordinary  faculty,  and  does  not  require  a  man  to  be 
more  than  a  fair  scholar,  as  is  proven  by  the  lives  of  some  of 
our  greatest  fortune- builders.  This  species  of  architecture 
requires  only  the  exercise  of  ordinary  endowments,  directed  by 
common  sense  and  a  due  regard  to  the  first  law  of  nature  — 
self-preservation. 

I  have  described  elsewhere  to  some  extent  the  apparent  diffi- 
culty presented  to  individual  enterprise  on  the  part  of  young 
men  emerging  into  business  life  when  they  find  opposed  to 
their  comparatively  small  means  large  aggregates  of  capital 
managed  by  corporations  or  so-called  trusts,  and  I  have  sug- 
gested the  remedy :  viz.,  to  adopt  the  tactics  of  their  competi- 
tors. Let  such  young  men  get  together  and  form  combinations 
of  their  own  to  go  into  such  lines  of  business  as  may  be  suited 
to  their  tastes  and  capacities.  There  is  no  limit  to  the  size  of 
possible  combinations,  and  consequently  no  limit  to  their  pos- 
sible aggregate  means  for  doing  business.  The  remainder  is  a 
question  of  skill,  experience,  and  enterprise.  In  large  combi- 
nations, of  course,  harmony  is  all-important.  But  there  is  noth- 
ing in  business  that  a  few  people  with  a  few  million  dollars  can 
do  but  what  a  few  hundred  people  with  the  same  number  of 
millions  of  dollars  can  do  just  as  well.  The  same  salaries  which 
are  paid  to  the  employe's  in  a  corporation  composed  of  a  few 
millionaires  will  afford  fair  wages  to  all  the  capitalists  of  a  coop- 
erative concern,  and  will  help  materially  in  the  struggle  by  ena- 
bling them,  if  necessary,  to  undersell  their  competitors.  If  not 
pressed,  it  need  not  force  the  competition,  but  can  place  the 
money  which  might  go  in  that  way  to  the  surplus  account  of 
the  company  for  further  extension  and  betterments.  There 
are  five  of  these  cooperative  companies  in  England,  paying 
almost  as  large  dividends  as  any  of  our  corporations. 

Some  eminent  authorities  differ  regarding  the  best  field  for 
youthful  enterprise.  Dr.  Chauncey  M.  Depew  thinks  a  man 
has  the  best  chance  in  a  young  community,  whereas  Russell 
Sage,  while  he  does  not  attach  vital  importance  to  environment, 


56  THE  WALL   STREET   POINT   OF   VIEW. 

thinks  it  is  better  for  a  young  man  to  remain  in  a  big  place, 
if  he  happens  to  be  there.  For  my  own  part,  I  think  the  secret 
of  success  lies  most  in  the  ability  to  turn  the  circumstances  of 
the  surroundings  to  the  best  account,  and  the  man  who  has  the 
elements  of  success  in  his  nature  and  character  need  care  much 
less  for  the  place  in  which  his  lot  may  be  cast  than  for  the  adap- 
tation of  his  means  to  the  end  of  success  in  that  place.  He 
centers  his  whole  attention  and  best  efforts  on  the  latter,  and 
does  not  whine  over  something  that  he  does  not  possess.  The 
best  evidence  that  a  person  can  give  of  his  ability  to  do  well  in 
some  other  place  is  to  succeed  where  he  is.  The  world  in 
general  rejects  all  suppositions  or  contingent  evidence  in  form- 
ing its  opinion  of  his  capacity.  It  simply  looks  at  the  result  in 
the  abstract.  It  has  no  time  for  excuses. 

If  a  man's  character  and  ability,  for  instance,  has  been  put 
to  the  test  as  a  financier  or  an  expert  in  finance,  in  a  position 
where  there  was  scope  for  the  fullest  demonstration  of  the  high- 
est faculties  in  this  field,  and  he  has  wholly  failed  to  manifest 
any  such  ability,  it  is  useless,  and  not  only  useless  but  ridiculous, 
to  tell  the  people  that  he  is  an  accomplished  college  professor 
and  a  mathematician  second  only  to  Sir  Isaac  Newton. 

Reviewing  briefly  the  list  of  successful  men,  it  strikes  me  that 
the  most  brilliant  examples  made  no  point  of  the  field  of  their 
operations  and  adventures,  and  in  the  majority  of  cases  it  would 
seem  that  they  had  little  or  no  choice  in  the  matter.  Those 
who  would  succeed  must  cultivate  the  habit  of  feeling  at  home 
wherever  their  lot  is  cast.  Emerson  in  his  essay  on  "  Self- 
Reliance,"  which  every  young  man  should  read  and  every 
traveler  also,  makes  some  signally  good  remarks  on  this  phase 
of  success  and  contentment.  He  says  :  — 

"  It  is  for  want  of  self-culture  that  the  idol  of  traveling,  the  idol 
of  Italy,  of  England,  of  Egypt,  remains  for  all  educated  Americans. 
They  who  made  England,  Italy,  or  Greece  venerable  in  the  imagina- 
tion did  so  not  by  rambling  around  creation  as  a  moth  around  a 
lamp,  but  by  sticking  fast  where  they  were,  like  an  axis  of  the 
earth.  I  have  no  churlish  objection  to  the  circumnavigation  of 
the  globe  for  the  purposes  of  art,  of  study,  and  benevolence,  so  that 


BUSINESS   EDUCATION.  57 

the  man  is  first  domesticated,  or  does  not  go  abroad  with  the  hope 
of  finding  somewhat  greater  than  he  knows.  Traveling  is  a  fool's 
paradise.  We  owe  to  our  first  journeys  that  place  is  nothing." 

In  the  spirit  of  the  philosopher  of  Concord,  let  young  men, 
and  all  men,  try  to  imagine  that  "  place  is  nothing,"  and  that 
it  behooves  them  to  exert  their  individuality  and  most  vigor- 
ous exertions  for  their  best  interests,  irrespective  of  place  and 
surroundings.  In  other  words,  let  them  be  themselves  and  put 
forth  their  best  energies  for  their  own  good  and  profit,  while 
being  careful  at  the  same  time  to  respect  the  rights  of  others. 

It  is  pertinent  to  state  here  that  modern  girls  have  a  great 
advantage  over  the  girlhood  of  their  grandmothers.  The  voca- 
tions of  the  male  sex  have  been  thrown  open  to  them,  with  very 
little  of  the  old  prejudices  remaining,  and  they  are  enabled 
to  compete  with  their  brothers  in  almost  every  walk  of  life,  ex- 
cept that  they  do  not,  as  a  rule,  make  good  speculators,  and 
comparatively  few  of  them,  luckily,  see  any  attraction  in  the 
stock  market. 

When  referring  to  this  subject  in  my  former  book  and  in  va- 
rious magazine  articles,  I  have  spoken  of  college  education  and 
its  inadequacy  to  form  the  minds  of  youth  for  the  struggles  to 
be  encountered  in  the  arena  of  practical  business  life.  I  find 
that  time  and  experience  are  bringing  many  people  over  to  this 
opinion  who  were  formerly  greatly  in  favor  of  college  education. 

The  conversion  of  college  graduates  and  classical  scholars  to 
this  view  is  not  by  any  means  a  new  thing,  though  some  people 
talk  as  if  it  were.  It  is  toward  half  a  century  since  Lord  Ma- 
caulay,  himself  a  very  distinguished  classical  scholar,  wrote  his 
famous  essay  on  "  The  London  University,"  in  which  he  showed 
that  the  time-honored  classical  education  of  that  day  was,  in  a 
large  measure,  utterly  useless  in  fitting  a  young  man  for  practi- 
cal business ;  and  though  Macaulay  was  an  admirer  of  Greek, 
almost  to  the  point  of  adoration,  he  greatly  deplored  the  time 
that  was  spent  studying  that  famous  tongue,  even  in  the  old  uni- 
versities, to  the  neglect  of  a  thorough  training  in  English  and 
science  which  would  far  better  qualify  a  man  for  the  business 


58  THE   WALL   STREET   POINT  OF   VIEW. 

by  which  he  is  to  earn  his  living  and  make  his  way  in  the 
world. 

Many  professors  and  presidents  of  colleges  are  convinced  of 
the  insufficiency  of  the  existing  system,  but  are  shy  and  slow 
about  confessing  that  they  have  been  so  long  on  the  wrong  side ; 
while  some  of  them  have  become  such  an  integral  part  of  the 
system  that  it  would  almost  be  like  dislocating  an  arm  or  a  leg 
to  disturb  them  in  the  serenity  of  their  ancient  notions.  An- 
other reason  that  comes  home  to  them  still  closer  is  that 
the  change  would  deprive  many  of  them  of  the  means  of  living. 
But  with  most  it  is  mere  timidity  of  declaring  any  change  of 
opinion  that  would  conflict  with  the  old  conservatism,  grown 
hoary  under  the  patronage,  protection,  and  indorsement  of  the 
most  eminent  scholars  of  centuries. 


CHAPTER   IX. 

FALSE   MEN   AND   METHODS  ON  THE   STREET. 

Modern  and  ancient  opinion  on  this  subject  compared.  —  How  it  manifests 
itself  in  Wall  Street  affairs. — The  inherent  capacity  to  resist  the  evil 
tendency.  —  Fortunes  that  are  made  by  degenerates  and  regenerates 
contrasted. 

ONE  of  the  popular  subjects  of  the  day  is  the  theory  of 
degeneration,  which  has  been  imbued  with  new  life  by 
that  voluminous  and  somewhat  eccentric  author,  Max  Nordau. 

In  all  that  has  been  lately  written,  very  little  has  appeared  to 
modify  the  earliest  opinions  on  this  question.  The  Creator 
Himself  made  the  discovery  of  human  degeneration  at  an 
early  period,  according  to  the  record  of  Moses,  who  told  the 
matter  candidly  in  the  following  terms :  "  And  God  saw  that 
the  wickedness  of  man  was  great  in  the  earth,  and  that  every 
imagination  of  the  thoughts  of  his  heart  was  only  evil  con- 
tinually. And  it  repented  the  Lord  that  he  made  man  on 
the  earth,  and  it  grieved  him  at  his  heart."  Surely  there  can 
be  no  stronger  testimony  to  man's  degeneracy  than  this. 

It  has  been  with  a  deep  sense  of  my  own  incapacity  to  cope 
with  the  mysteries  of  this  question  that  I  have  made  several 
references  to  it  for  some  years  past  at  the  request  of  certain 
journalists  and  newspaper  proprietors ;  but  any  opinion,  no 
matter  whence  it  emanates,  provided  the  source  is  only  human, 
must  be  of  a  speculative  character. 

In  Wall  Street  affairs  we  have  many  examples  of  the  degen- 
erates ;  but  they  do  not  belong  to  the  ranks  of  the  genuine 
business  men,  and,  such  as  they  are,  they  seem  to  be  now  in 
a  fair  way  of  being  expelled  from  what  is  known  as  the  Wall 
Street  district.  They  are,  for  the  most  part,  simply  confidence 

59 


60  THE   WALL   STREET   POINT   OF   VIEW. 

men  who  have  not  had  any  Wall  Street  training  or  experi- 
ence, and  do  not  require  it,  since  their  game  for  making  money 
is  entirely  outside  of,  and  antagonistic  to,  genuine  Wall  Street 
methods.  Their  system  is  one  of  misrepresentation  and 
deliberate  lying.  They  personate  Wall  Street  methods  to  out- 
siders, and  by  this  means  get  people  in  various  parts  of  the 
country  to  send  them  money  for  the  ostensible  purpose  of  spec- 
ulating and  investing  in  stocks,  but  the  alleged  purpose  is  never 
put  into  operation.  The  money  is  pocketed  by  the  confidence 
operators,  but  no  stocks  are  bought  in  good  faith,  and  fresh 
victims  are  sought  through  similar  false  pretenses  by  advertis- 
ing in  the  Sunday  newspapers  and  by  sending  circulars  offering 
large  monthly  dividends  and  professing  to  have  a  "  system  "  of 
speculation  that  cannot  fail.  Then  there  is  another  class  of 
more  clever  swindlers  who  occasionally  give  the  victim  some 
chance,  with  the  ultimate  design  of  leading  him  further  on  and 
bleeding  him  more  copiously. 

These  are  the  financial  degenerates  of  our  day,  often  found 
in  the  midst  of  our  honest  business  life  and  operations,  of 
whom  we  must  beware,  and  concerning  whom  we  wish  to  warn 
people  who  are  ignorant  of  their  deceptive  and  insinuating 
methods. 

A  feeling  of  regret  cannot  always  be  repressed  at  the  view  of 
the  broken-down  merchant,  and  small,  timid,  impecunious  spec- 
ulators who  frequent  the  bucket  shops,  so  called,  in  hope  of  gain. 

The  proprietor's  game  is,  on  the  face,  fair  enough ;  but  the 
customer  is  so  intent  on  digging  his  own  pit  that  he  fails  to 
calculate  the  chief  factor  involved.  The  margin  required  is 
i  per  cent.,  and  you  pay  one  eighth  commission  to  come  in  and 
one  eighth  to  go  out.  Therefore,  when  you  lose  a  dollar  you 
lose  a  whole  dollar ;  when  you  win  a  dollar  you  collect  75  cents. 
The  odds  of  100  to  75  are  thus  continuously  against  you. 

Again,  the  customer  goes  wholly  on  guess  work.  If  he  were 
to  toss  a  copper  as  to  whether  to  buy  or  sell,  he  might  be  right 
something  like  half  the  time,  but  if  the  odds  are  i  to  2  that  a 
stocks  will  move  in  a  given  direction  and  also  i  to  2  that  a 
guesser  will  guess  right,  the  guesser  starts  in  with  actual  odds 


FALSE   MEN   AND   METHODS   ON   THE   STREET.      6l 

of  4  to  i  against  him.  The  bucket-shop  customer  may  not  be 
familiar  with  this  element  of  probabilities,  but  the  mathemati- 
cal professors  lay  it  down,  and  Mr.  Proctor  mentions  it  in  his 
treatise  on  gambling,  and  the  prosperity  of  the  bucket  shops 
seems  to  bear  it  out  as  a  truth. 

In  some  of  these  byways  of  finance  you  can  buy  one  share. 
In  others,  where  five  shares  are  the  smallest  gamble,  two,  three, 
sometimes  five  small  speculators  will  share  in  a  five-share  lot. 
These  facts  are  not  stated  as  evidences  of  depravity  nor  as  the 
basis  for  sneers  at  honest  and  laborious  poverty;  they  only 
tend  to  show  that  where  people  are  unable  to  dig  large  holes 
to  bury  themselves  in  they  will  dig  small  ones. 

A  pitfall  in  the  regular  stock  market  is  the  small  margin 
system.  There  are  indeed  advocates  of  this  system,  on  the 
ground  that  where  the  market  goes  against  you  it  is  better  to 
lose  i  or  2  per  cent,  than  5  or  10.  And  where  a  speculator  is 
in  close  touch  with  the  exchange  this  may  answer.  On  the 
exhaustion  of  his  margin  he  may  re-margin,  or  may  let  the 
stock  alone  until  a  proper  time  comes  to  buy  in  again.  But 
if  the  speculator  has  other  affairs,  this  system  is  eminently  a 
pitfall.  Let  him  buy  into  a  stock  at  75  at  5  per  cent,  margin, 
which  is  the  smallest  that  any  reputable  broker  will  accept,  even 
on  stop  order.  It  is  quite  upon  the  cards  that  the  said  stock 
will  drop  to  72,  or  71,  or  70,  within  a  few  hours,  or  even  half 
hours,  and  then  rally  again  to  cost  price  or  above.  In  such  a 
case,  with  a  proper  margin  he  would  not  be  injured  ;  but  with 
a  slim  margin  he  has  lost  his  total  investment. 

As  a  matter  of  fact,  men  who  speculate  on  small  margins, 
2  and  3  per  cent,  acquire  reckless  and  unreasonable  habits  of 
dealing,  and  degenerate  into  actual  gamblers.  They  are  almost 
certain  to  be  losers  also,  because  the  same  odds  operate  against 
them  that  we  have  seen  operating  against  the  bucket-shop  play- 
ers. Brokers'  commissions,  one  eighth  each  way,  must  be  paid. 
On  i  per  cent,  margins  the  odds  are  100  to  75  ;  on  2  per  cent., 
100  to  8  7^;  on  3  per  cent.,  100  to  92  ;  whereas  the  operator 
who  puts  up  10  per  cent,  margin  has  only  odds  of  z\  per  cent, 
against  him,  with  a  fair  prospect  in  any  ordinary  condition  of 


62  THE   WALL   STREET   POINT   OF  VIEW. 

the  market  of  not  being  sold  out  for  want  of  margin.  The 
man  who  puts  up  16  per  cent. usually  has  another  10  percent, 
in  reserve,  which  is  almost  sure  to  carry  him  out  in  the  end  to 
a  profit. 

One  of  the  deepest,  most  precipitous  pitfalls  is  dug  for  the 
unwary  by  the  professional  point-giver.  King  Solomon  is  re- 
puted as  saying  in  the  Book  of  Proverbs,  "  Surely  in  vain  is 
the  net  spread  in  the  sight  of  any  bird,"  but  the  people  who 
slide  numerously  and  with  alacrity  into  the  holes  dug  for  them 
by  the  givers  of  points  seem  to  gainsay  the  wisdom  of  Solomon. 

The  point-giver  is  of  Protean  build.  Sometimes  he  makes 
your  acquaintance  accidentally,  as  it  were.  Sometimes  he  brings 
a  letter  of  introduction  from  some  person  who  does  not  thor- 
oughly know  him.  Then,  again,  he  advertises.  When  he 
advertises  it  is  done  in  something  like  the  form  of  one  of  these 
announcements,  which  can  be  cut  by  the  dozen  out  of  many 
Sunday  newspapers  :  — 

CONFIDENTIAL  CLERK  to  prominent  operator  knows  of  good 
dividend  paying  stock  that  will  yield  good  profits.  Address  Profits, 
185, office. 

A  Great  Opportunity  for  making  money  in  stocks.  For  particu- 
lars address  Active,  box  202, office. 

A.  —  WANTED  —  Party  with  capital  to  take  advantage  of  my 
reliable  information  on  stock  market.  Address  Success,  box  24, 
office. 

If  you  address  either  of  these  ingenious  gentlemen,  he  will 
call  upon  you  if  he  thinks  you  are  worth  calling  upon,  and  after 
some  conversation  touching  the  necessity  of  caution  and  con- 
fidence on  both  sides,  and  the  superior  sources  of  information 
enjoyed  upon  his  side,  he  will  tell  you  to  go  at  once  to  your 
broker  and  buy  X,  Y,  Z  shares.  That  is,  unless  he  has  just  ad- 
vised some  other  person  to  buy  X,  Y,  Z ;  in  which  case  he  will 
earnestly  urge  you  to  hasten,  without  loss  of  time,  to  sell  X,  Y,  Z. 
As  for  the  profits,  in  all  cases  he  is  to  have  half  the  net  gain, 
and  he  leaves  it  to  your  honor  to  let  him  know  what  the  amount 
of  the  gain  is. 


FALSE    MEN    AND   METHODS   ON    THE   STREET.      63 

If  ten  persons  act  upon  his  advice,  five  will  gain  and  five  will 
lose.  The  losers  he  has  nothing  to  do  with,  he  would  prefer 
not  to  see  them ;  but  he  has  the  names  of  the  winners  in  his 
memorandum  book,  and  he  rarely  fails  to  collect  from  them. 
This  pitfall  looks  like  a  shallow  artifice,  and  it  is ;  but  a  great 
many  people  slide  down  its  sides  in  the  course  of  any  given 
year.  Else  how  should  the  professional  point-giver  flourish  as 
he  does,  and  have  so  much  cash  wherewith  to  advertise  in  the 
Sunday  newspapers  ?  Among  the  degenerates  that  infest  Wall 
Street,  that  class  which  has  been  running  at  intervals  which  are 
known  as  "  discretionary  pools  "  is  one  of  the  most  atrocious. 
Their  depredations,  it  would  seem,  have  been  most  conspicu- 
ous among  savings  banks  depositors,  to  whom  they  make  special 
appeals  in  their  circulars,  showing  the  profits  derivable  from 
their  guaranteed  two  per  cent,  a  month,  compared  with  the 
small  interest  paid  by  the  savings  banks.  These  land  sharks 
were  making  very  bold  and  profitable  invasions  on  the  deposits 
of  many  savings  banks  throughout  the  country  when  the  police 
raids  some  time  ago  put  a  partial  stop  to  their  fraudulent  opera- 
tions ;  but  they  are  not  all  dead,  and  new  adventurers  of  a  simi- 
lar character  are  springing  up  every  day  in  all  parts  of  the 
country. 

One  of  the  worst,  deepest,  most  dangerous,  and  most  fre- 
quently tumbled  into  of  all  pitfalls  of  Wall  Street  is  dug  by 
operators  themselves,  and  seems  to  be  the  result  of  a  weak- 
ness of  the  human  mind,  which  leads  it  into  the  practice  of 
taking  small  profits  and  large  losses. 

A  speculator  puts  up  10  per  cent,  margin  and  buys  X,  Y,  Z 
at  75.  The  shares  fall  to  74,  73,  72,  and  so  on.  Now,  if  he 
knows  the  property  to  be  sound  and  really  valuable,  there  is  no 
reason  why  he  should  relinquish  it  merely  because  the  market 
price  is  lower  than  it  was.  On  the  contrary,  if  he  can  afford 
the  cost,  it  may  be  policy  for  him  to  buy  another  lot  at  70,  and 
even  another  lot  at  65,  besides  protecting  his  first  purchase. 

But  suppose  he  is  merely  the  kind  of  speculator  whose  gains 
proceed  from  turning  a  small  capital  frequently,  is  it  not  his 
most  obviously  plain  course  of  action  to  drop  his  purchase  at  73 


64  THE   WALL  STREET   POINT   OF   VIEW. 

and  take  chances  of  buying  in  again?  Most  of  us  would  say, 
"  Yes,  by  all  means."  But  as  a  matter  of  fact  he  will  not  drop 
out  until  the  10  per  cent,  margin  is  exhausted.  On  the  other 
hand,  if  X,  Y,  Z  had  gone  up  to  77  or  78  and  then  shown  a 
tendency  to  sag  off,  this  same  operator  would  at  once  have 
closed  the  transaction,  thus  showing  a  willingness  to  gain  by 
twos  and  threes  and  lose  by.  tens. 

An  English  novelist  once  wrote  :  "  There  are  at  this  moment 
10,000  Englishmen  wandering  homeless  and  penniless  over  the 
continent  of  Europe  because  they  would  not  lead  trumps  at  the 
proper  time!"  So  any  well-informed  broker  can  say  of  his 
own  personal  knowledge  and  experience,  "There  are  thou- 
sands of  American  citizens  who  are  to-day  poor  because  they 
would  not  cut  short  their  losses  and  let  their  profits  run  on." 

There  is  also  another  dangerous  pitfall  which  men  dig  for  them- 
selves ;  namely,  the  belief  that  because  a  certain  description  of 
shares  mounts  and  soars  above  previous  calculations  of  the  gen- 
eral market,  therefore  it  is  desirable  to  buy  into  it  after  it  has 
mounted  during  a  long  period  of  days.  This  belief  is  almost 
universal,  and  yet  it  directly  contradicts  our  experience  and  the 
laws  of  nature.  We  know  that  the  higher  the  wave  gets,  the 
weaker  it  is  at  the  top,  while  its  base  is  always  strong  ;  and  we 
also  know  that  whatever  goes  up  has  a  tendency  to  descend 
again,  and  that  the  time  always  comes  when  the  holders  of  any 
commercial  property,  no  matter  how  desirable,  prefer  money 
to  property. 

Still,  the  majority  of  outside  operators  regard  the  market  as 
strongest  when  prices  are  up  and  weakest  when  prices  are 
down,  and  act  accordingly;  whereas  those  who  know,  base 
their  actions  on  the  firm  truth  that  the  market  is  never  so 
weak  as  when  it  is  high,  and  never  so  strong  as  when  it  is  low ; 
being,  in  fact,  like  that  ancient  wrestler  who,  whenever  forced 
down  by  his  antagonist  so  that  his  body  touched  the  ground, 
immediately  received  from  Mother  Earth  a  redoubled  allow- 
ance of  strength. 

Some  men  are  born  degenerate,  some  achieve  degeneracy, 
and  some  have  degeneracy  thrust  upon  them ;  and  one  is  likely 


FALSE   MEN   AND   METHODS   ON   THE   STREET.      65 

to  meet  these  three  kinds  of  degeneracy  in  Wall  Street.  I 
think,  however,  that  of  all  the  class,  those  who  achieve  de- 
generacy are  in  the  majority,  since  "  evil  communications  cor- 
rupt good  manners."  Most  men  are  born  with  a  capacity  for 
doing  good,  and  they  are  capable  of  acting  an  honest,  straight- 
forward part  in  business,  if  they  will  only  exercise  that  faculty. 
Money  gained  by  crooked  business  methods  does  not  make  its 
possessors  prosperous  for  many  generations,  seldom  even  for 
one ;  and  I  believe,  if  the  statistics  on  the  subject  could  be  fully 
ascertained,  it  would  be  seen  that  the  number  who  adopt  surrep- 
titious means,  no  matter  how  well  concealed,  to  succeed  in  life 
would  show  far  more  failures  in  their  ranks,  perhaps  ten  times 
more,  than  those  who  fail  while  seeking  fortune  by  honest 
methods.  The  fortunes  made  by  degenerates  are  usually  built 
upon  sandy  and  shifty  foundations,  while  those  that  are  amassed 
by  their  opposites,  the  regenerates,  the  good,  and  the  true 
among  mankind,  are  founded  upon  rock  of  the  most  adaman- 
tine quality. 


CHAPTER   X. 

PANICS  AND  THEIR   INDICATIONS. 

The  causes  which  usually  give  origin  to  panics  described.  —  How  these 
great  upheavals  in  business  and  finance  may  be  partially  avoided  and 
their  consequences  alleviated  when  they  do  occur.  —  Greater  elasticity 
in  the  methods  of  banking  required  to  enable  the  banks  to  meet  emer- 
gencies.—  These  institutions  have  in  recent  years  done  well  when  not 
handicapped  by  law. — They  should  be  permitted  to  make  more  liberal 
use  of  their  reserve  to  relieve  financial  distress.  —  How  banks  and  busi- 
ness men  should  cooperate  in  times  of  impending  crisis.  — The  forecast 
of  the  panic  of  1 893. 

MY  belief  in  prophecy  generally  resolves  itself  into  the 
fact  that  there  is  a  great  deal  of  repetition  in  all  his- 
tory, and  by  watching  the  present,  storing  the  mind  with  a 
careful  knowledge  of  the  past,  and  collating  the  facts  thus  in 
possession,  a  pretty  good  idea  of  the  future  may  in  many 
instances  be  premised  without  any  pretensions  to  supernatural 
power.  When  events  turn  out  in  accordance  with  the  general 
tenor  of  any  instance  of  forecast,  that  is  irrefutable  evidence 
that  the  reasoning  has  been  practically  correct,  irrespective  of 
the  principle  upon  which  it  may  be  based. 

I  shall  reproduce  here  the  greater  portion  of  an  article  which 
I  wrote  by  request  and  which  was  published  January  13,  1893. 
In  this  I  stated  the  conditions  which  underlie  panics,  and  the 
deductions  were  unhappily  exemplified  in  the  panic  of  1893, 
which  soon  began.  The  article  was  as  follows  :  — 

The  query  now  being  asked  on  all  sides,  "  Will  there  be  a 
panic  in  1893?"  should  impress  business  men  and  financiers 
with  the  fact  that  certain  peculiarities  in  the  development  and 
trade  of  the  United  States  render  our  markets  more  exposed 
to  peril  than  those  of  any  other  nation,  and  make  the  question 
of  panics  a  peculiarly  American  one,  as  we  shall  see. 

66 


PANICS   AND   THEIR   INDICATIONS.  67 

The  financial  crises  known  as  panics  are  commonly  spoken 
of  as  freaks  of  the  markets  due  to  antecedent  reckless  specula- 
tion; as  being  controlled  in  their  progress  by  the  acts  of  men 
and  banks  who  have  lost  their  senses,  but  above  all  as  being 
easily  prevented,  and  as  easily  cured  when  they  happen. 
These  are  the  notions  of  mere  surface  observers.  They  may 
be  in  a  measure  true  when  applied  to  the  markets  of  some  of 
the  older  countries,  whose  business  mcves  in  long-established 
grooves  and  embraces  but  little  of  the  risk  attendant  on  new 
enterprises.  In  France  and  Germany,  for  example,  the  hazards 
of  business  are  almost  entirely  confined  to  the  accidents  of 
political  events,  and  such  nations  are  exempt  from  panics  due 
to  purely  commercial  causes.  Panics  in  the  United  States  are 
due  principally  to  causes  from  which  European  countries  are 
exempt. 

We  are  still  a  nation  of  pioneers.  Nearly  fifteen  millions  of 
people  are  added  to  our  population  every  ten  years.  This  new 
population  has  to  subdue  new  territory.  New  lands  have  to 
be  cleared,  new  mines  opened,  new  railroads  built,  new  banks 
created,  new  industries  established,  and  new  corporations 
founded.  These  new  ventures  are  necessarily  in  a  measure 
experimental.  Some  of  them  fail  utteily  while  others  succeed 
magnificently.  They  require  large  outlays  of  capital  in  advance 
of  obtainable  results.  In  many  cases  these  outlays  are  met  by 
borrowing,  the  loan  being  secured  by  liens  upon  the  uncertain 
undertakings,  and  therefore  lacking  the  stability  of  value  that 
attaches  to  well-developed  investments.  We  have  thus  a  cease- 
less stream  of  new  issues  of  stocks,  mortgages,  and  commercial 
paper,  comprising  a  large  amount  of  outstanding  obligations, 
liable,  from  the  uncertainty  of  their  basis,  to  wide  fluctuations 
in  value.  Then  we  have  also  a  large  amount  of  obligations 
issued  against  enterprises,  which,  though  not  properly  new,  are 
still  in  an  experimental  stage,  and  the  value  of  which  is,  there- 
fore, subject  to  wide  fluctuations.  Issues  of  this  character 
naturally  appeal  to  the  adventurous  instincts  of  our  people  and 
cause  activity  in  speculation. 

The  action  of  commerce,  like  the  motion  of  the  sea  or  of  the 


68  THE   WALL   STREET   POINT   OF   VIEW. 

atmosphere,  follows  an  undulatory  line.  First  comes  an  ascend- 
ing wave  of  activity  and  rising  prices  ;  next,  when  prices  have 
risen  to  a  point  that  checks  demand,  comes  a  period  of  hesita- 
tion and  caution ;  then  contraction  by  lenders  and  discount- 
ers, and  then  a  movement,  in  which  holders  simultaneously 
endeavor  to  realize,  thereby  accelerating  a  general  fall  in 
prices.  Credit  thereupon  becomes  more  sensitive  and  is  con- 
tracted ;  transactions  are  diminished ;  losses  are  incurred 
through  the  depreciation  of  property,  and  finally  the  ordeal 
becomes  so  severe  to  the  debtor  class  that  forcible  liquidation 
has  to  be  adopted,  and  insolvent  firms  and  institutions  must  be 
wound  up.  This  process  is  a  periodical  experience  in  every 
country,  and  the  sharpness  of  the  crisis  that  attends  it  depends 
chiefly  on  the  steadiness  and  conservatism  of  the  business 
methods  in  each  community  affected. 

In  times  of  crisis,  the  obligations  of  the  enterprises  so  numer- 
ous in  this  country  suffer  instantly  from  the  uncertainty  about 
their  intrinsic  value.  Holders  are  anxious  to  get  rid  of  them  ; 
banks  which  have  advanced  money  on  them  call  in  their  ad- 
vances, and  they  become  virtually  unavailable  assets.  Every 
panic  that  has  happened  since  the  beginning  of  the  era  of  rail- 
roads in  this  country  has  been  intensified  many  fold  by  the 
sudden  shrinkage  in  the  value  of  this  class  of  assets,  and  it  is 
precisely  here  that  the  aggravation  and  the  chief  danger  of  an 
American  panic  centers.  Risks  and  panics  are  inseparable 
from  our  vast  pioneering  enterprise,  and  all  we  can  hope  is 
that  they  may  diminish  in  severity  in  proportion  as  our  older 
and  more  consolidated  interests  afford  an  increasing  power  of 
resistance  to  their  operation.  I  am  disposed  to  think  that  in 
the  future  the  counteraction  from  this  source  will  be  much 
more  effective  than  it  has  been  in  the  past.  The  accumulation 
of  financial  resource  available  for  market  purposes  at  our 
monetary  centers  is  increasing  at  a  very  rapid  rate.  Evi- 
dence of  this  is  seen  in  the  fact  that  while  the  magnitude  of 
our  corporate  undertakings  is  augmenting  every  year,  we  are 
also  every  year  becoming  less  dependent  on  the  money  mar- 
kets of  Europe,  and  our  large  corporate  loans  are  now  made 


PANICS   AND  THEIR   INDICATIONS.  69 

principally  at  home.  These  accumulations  impart  elasticity  to 
our  financial  system  and  serve  as  a  buffer  against  great  financial 
disturbances. 

I  cannot  refrain  from  expressing  the  opinion  that  there  are 
permitted  to  exist  in  this  country  conditions  which  needlessly 
aggravate  the  perils  of  financial  upheavals,  when  they  occur.  In 
every  panic  much  depends  upon  the  prudence  and  self-control 
of  the  money-lenders.  If  they  lose  their  heads,  and  indiscrimi- 
nately refuse  to  lend,  or  lend  only  to  the  few  unquestionably 
strong  borrowers,  the  worst  forms  of  panic  ensue.  If,  on  the 
contrary,  they  accommodate  to  the  fullest  extent  of  their  ability 
the  larger  class  of  reasonably  safe  borrowers,  then  the  latter 
may  be  relied  upon  to  protect  those  whom  the  banks  reject, 
and  thus  the  mischief  may  be  kept  within  some  bounds. 
Everything  depends  upon  anxiety  being  held  in  check  by  an 
assurance  that  deserving  debtors  will  be  protected.  This  is 
tantamount  to  saying  that  all  depends  on  the  calmness  and 
wisdom  of  the  banks.  They  may  easily  mitigate  or  aggravate 
the  severity  of  the  crisis  according  as  they  are  prudently  liberal 
or  blindly  selfish.  It  is,  perhaps,  safe  to  say  that  the  banks 
never  do  all  they  may,  but  the  banks  of  New  York  must  be 
credited  with  having  shown  great  sagacity  in  troubles  of  this 
kind  within  the  last  twenty-five  years.  They  have  largely  suc- 
ceeded in  combining  self-protection  with  the  protection  of  their 
customers,  and  the  precedents  they  have  established  will  go  far 
toward  breaking  the  force  of  any  further  panic. 

Unfortunately  the  law  imposes  restraints  upon  the  national 
banks  which  seriously  interfere  with  the  wise  discretion  of  those 
institutions.  As  the  law  now  stands,  the  banks  are  liable  to  be 
wound  up  at  the  order  of  the  government  if  they  permit  their 
lawful  money  reserves  to  fall  below  25  percent,  of  their  legal 
deposits.  This  establishes  a  "  dead  line  "  which  is  so  dreaded 
when  approached  that  it  becomes  almost  a  panic  line.  When 
that  limit  is  reached,  the  banks  are  compelled  to  contract  their 
loans,  and,  under  certain  conditions,  the  contraction  of  loans 
means  forcible  liquidation  without  regard  to  consequences. 
Thus  the  very  contrivance  designed  to  protect  the  banks 


70  THE   WALL   STREET   POINT   OF   VIEW. 

becomes  a  source  of  serious  danger  to  their  customers  and 
therefore  to  the  banks  themselves ;  and  in  times  of  monetary 
pressure  it  is  the  most  direct  provocative  of  panic.  Were  the 
banks  allowed  to  use  their  reserves  under  such  circumstances, 
a  fund  would  be  provided  for  mitigating  the  force  of  the  crisis 
and  the  danger  might  be  gradually  tided  over ;  but  as  it  is,  the 
banks  can  do  little  or  nothing  to  avert  a  panic ;  on  the  con- 
trary, the  law  compels  them  to  take  a  course  which  precipitates 
it ;  and  when  the  crash  has  come,  they  have  to  disregard  the 
law  and  do  what  they  can  to  repair  the  catastrophe  that  a  pre- 
posterous enactment  has  helped  to  bring  about.  This  is  one 
of  not  a  few  restrictions  upon  our  national  banks  which  should 
be  stricken  from  the  statute  book. 

It  was  chiefly  due  to  the  prompt  and  liberal  policy  of  the 
banks  that  the  panic  of  1884  was  so  short  lived  and  so  narrowly 
circumscribed.  The  results  of  the  timely  action  taken  by  the 
managers  of  these  institutions  in  that  crisis  prove  that  panics 
can  be  arrested  by  proper  methods,  and  that  quick  and  deter- 
mined action  is  indispensable  in  the  incipient  stage  of  the 
emergency.  If  bank  presidents  could  be  relied  on  by  the  busi- 
ness community  to  act  promptly  and  in  unison  with  the  busi- 
ness men,  as  they  did  in  this  instance,  threatened  panics  need 
have  but  little  terror  for  the  people  who  now  live  in  constant 
dread  lest  an  outburst  of  business  disaster  may  be  sprung  upon 
them  at  any  time  in  any  decade.  In  the  early  history  of  panics, 
bank  managers,  as  a  rule,  have  acted  without  system,  without 
judgment,  and  almost  entirely  without  any  well-defined  plan  of 
action.  There  has  been  an  astonishing  lack  of  vigor  in  their 
methods  and  purposes. 

If  the  panic  of  1873  had  received  the  same  vigorous  treat- 
ment at  its  beginning  as  that  of  1884,  it  could  just  as  easily  have 
been  checked  as  the  latter,  and  the  entire  country  would  have 
been  saved  in  a  great  measure  from  the  depressing  effects  of  that 
serious  collapse  and  its  attendant  disasters,  which  caused  a  state 
of  general  prostration  for  five  or  six  years  succeeding.  These 
years,  from  a  business  standpoint,  appear  as  a  blank  in  the  his- 
tory of  the  country's  progress.  It  was  the  disturbing  element  of 


PANICS   AND   THEIR   INDICATIONS.  71 

panic  makers,  who  generally  constitute  one  of  the  most  potent  fac- 
tors of  disruption  to  be  dealt  with  in  seasons  of  business  trouble, 
that  caused  the  greater  part  of  the  mischief  at  the  time  of  Jay 
Cooke's  failure  in  1873.  The  holders  of  Northern  Pacific  bonds, 
finding  then  that  the  security  was  no  longer  equal  to  that  of 
government  bonds  (as  they  had  been  taught  to  believe),  but 
was  apparently  worthless,  became  panic  stricken  at  their  losses, 
and  were  all  transformed  into  panic  makers,  infusing  the  spirit 
of  distrust  into  every  one  with  whom  they  came  into  contact, 
until,  like  a  fatal  virus,  their  terror  inoculated  the  whole  coun- 
try, spreading  business  disaster  far  and  wide. 

It  is  to  be  hoped  that  in  future  legislation  on  currency  re- 
form, ample  provision  against  the  emergencies  liable  to  arise 
out  of  panics  will  be  regarded  as  of  the  very  highest  importance. 

Referring  to  my  own  forecast  of  the  panic  of  1893,  I  think  I 
may  afford  to  lay  modesty  aside  in  view  of  the  value  of  the  facts. 

The  following  communications  were  written  a  few  months 
prior  to  the  outbreak.  Then  was  the  calm  before  the  storm, 
but  the  rumblings  of  distant  thunder  were  occasionally  heard, 
for  hearing  which  I  do  not  take  any  special  credit  to  myself  or 
pretend  that  I  have  sharper  ears  than  other  people.  There 
was  a  host  of  bankers  and  brokers  in  Wall  Street  and  elsewhere 
who  heard  those  rumblings  as  well  as  myself,  but  only  a  few  of 
them  spoke  out  their  minds  freely,  and  fewer  still  took  it  upon 
themselves  to  caution  and  advise  those  at  the  helm  of  state. 
The  storm  burst  at  length  in  tremendous  fury  on  the  heads  of 
all  the  people  of  the  nation,  but  directed  its  most  destructive 
bolts  against  the  larger  financial  centers,  of  which  Wall  Street, 
of  course,  was  the  chief. 

I  had  taken  especial  pains  at  the  time  to  warn  the  Treasury 
through  President  Cleveland  regarding  the  impending  danger, 
and  to  suggest  how  it  might  be  averted.  I  wrote  to  him  as 
follows  :  — 

"  NEW  YORK,  March  28,  1893. 

"  MR.  PRESIDENT  :  —  In  view  of  the  fact  that  the  United  States 
Treasury  gold  balance  is  now  so  low,  while  the  gold  balance  in  the 
banks  is  in  a  far  more  satisfactory  condition,  it  would  appear  advan- 


72  THE   WALL   STREET   POINT   OF   VIEW. 

tageous  to  strengthen  the  Treasury  gold  balance  through  a  negotiation 
of  bonds.  The  banks,  I  find  in  a  canvass  I  have  made  amongst  many 
of  the  large  ones,  are  perfectly  willing  to  part  with  $25,000.000  of  their 
gold  for  bonds,  as  they  are  anxious  to  do  all  in  their  power  to  uphold 
the  government  credit.  Such  a  negotiation  as  this  could  be  better 
effected  now  than  later  on,  and  its  moral  influence  would  be  to  restore 
confidence,  now  on  the  wane,  in  the  ability  of  the  government  to 
continue  gold  payments. 

"  Respectfully  yours, 

"HENRY  CLEWS." 

The  time  at  which  this  letter  is  dated  was  very  opportune 
for  obtaining  enough  of  gold  through  the  channels  indicated 
therein,  and  a  loan  of  twenty-five  millions  then  would  have 
been  more  efficacious  in  allaying  the  excitement  and  impeding 
the  panic  than  four  or  five  times  that  amount  a  few  months 
later ;  and,  moreover,  one  hundred  millions  could  have  been 
more  easily  obtained  then  than  twenty-five  millions  at  the  later 
date.  History  will  bear  me  out,  I  think,  as  regards  the  rela- 
tive conditions  of  the  money  market  and  the  borrowing  power 
at  these  two  dates. 

Mr.  Cleveland,  however,  did  not  seem  to  pay  any  attention 
to  these  suggestions.  Why  did  he  not  ?  Simply  because  the 
result  of  their  operation  would  have  been  in  conflict  with  his 
political  policy  at  that  time,  which  was  to  let  things  severely 
alone,  so  that  some  pressure  might  come  to  teach  Congress  an 
"  object  lesson  "  which  would  force  it  to  repeal  the  silver  pur- 
chasing clause  of  the  Sherman  Law.  That  law,  he  seemed  to 
think,  was  at  the  root  of  all  the  financial  evil  and  distress  with 
which  the  country  was  then  visibly  menaced.  The  gathering 
clouds  which  contained  a  terrific  storm  had  already  begun  to 
darken  the  horizon  and  threatened,  momentarily,  to  burst ;  and 
if  Mr.  Cleveland  could  have  foreseen  the  fury  of  that  financial 
gale,  I  am  certain  that  he  would  have  used  the  best  means  at 
his  disposal  to  weather  if  not  to  avert  it. 

An  adherent  of  Mr.  Cleveland  has  asked  me  this  question  : 
"  Do  moderate  men  think  Cleveland  deliberately  and  purposely 
brought  on  the  panic,  to  teach  Congress  by  an  object  lesson?" 


PANICS   AND   THEIR   INDICATIONS.  73 

I  answered  :  "  He  said  so  himself,  and  took  great  pride  in  this 
theory  at  the  time,  on  the  principle  of  making  a  law  obnoxious 
by  executing  it.  He  has  never  said  he  was  sorry  for  it." 

I  do  not  wish  the  reader  to  imagine  that  I  think  there  was 
any  feeling  of  malevolence  in  Mr.  Cleveland's  desire  to  bring 
about  a  panic  just  as  an  "  object  lesson  "  to  Congress,  for  the 
purpose  of  urging  that  honorable  body  to  repeal  the  obnoxious 
clause  of  the  Sherman  Silver  Act.  He  had  no  conception  of 
the  baneful  results  that  were  inevitable  from  his  more  than 
executive  action.  He  could  start  the  panic,  but  could  not  stop 
it  at  pleasure.  His  course  of  procedure  in  the  matter  reminds 
me  of  a  story  that  is  told  about  a  raw  recruit  in  the  English 
army.  On  his  advent  into  barracks  the  first  thing  that  attracted 
his  attention  was  the  cannon,  a  specimen  of  which  he  had 
never  seen  before.  He  was  an  Irishman.  So  he  said  to  the 
comrade  to  whose  care  he  had  been  consigned  and  who  ex- 
plained the  nature  of  the  destructive  weapon,  "  I  would  like  to 
see  how  she  shoots.  Will  you  charge  her  ?"  The  comrade 
consented  and  put  in  the  ordinary  charge  of  powder,  but,  when 
he  was  about  to  apply  the  match  to  the  touchhole,  he  recol- 
lected that  there  was  no  ball  in  the  cannon,  and  that  he  could 
not  give  Pat  a  full  and  satisfactory  illustration  of  its  power  with- 
out that  necessary  adjunct.  "  Oh,  never  mind,"  says  Pat  ; 
"  what's  the  use  of  wasting  a  ball  on  a  try  shot  ?  I'll  put  in 
me  head,  and  you  shoot  aisy." 

So  Mr.  Cleveland  thought  he  could  shoot  easy,  but  the 
range  of  the  panic  was  a  long  distance  one,  and  went  far 
beyond  his  calculation.  While  it  would  be  impossible  to  esti- 
mate the  numbers  of  killed  and  wounded  by  that  shot,  it  is  safe 
to  say  that  there  have  been  very  few,  if  any,  pitched  battles  in 
the  whole  range  of  ancient  and  modern  history  so  expensive 
as  Mr.  Cleveland's  "  try  shot "  at  Congress. 


PART  II. 

WALL  STREET  AND  THE  GOVERNMENT. 


CHAPTER   XI. 

WASHINGTON    DOMINATION    IN    FINANCE,    SPECULATION, 
AND  BUSINESS. 

Some  inquiry  into  its  nature.  —  Assumes  the  complexion  of  a  centralizing 
bureau  of  financial  information  with  a  censorship  attachment. — The 
attempt  of  the  political  power  to  override  the  financial,  a  failure.  —  All 
financial  roads  lead  to  Wall  Street.  —  New  York  destined  to  be  the 
world's  center  of  finance.  —  Politics  cannot  rule  finance  except  on  a  very 
broad  basis.  —  Some  sapient  object  lessons  from  the  Constitution  in  their 
application  to  statesmanship,  politics,  and  finance. — Justice  Story's 
opinions  of  the  duties  of  a  President  in  giving  information  and  counsel 
to  Congress.  —  The  immense  powers  of  the  President  in  these  matters, 
and  the  requisite  qualifications  to  enable  him  to  advise.  —  His  great 
and  varied  responsibility.  —  The  "  duty  of  a  President  "  is  more  than 
"  executive."  —  A  nice  distinction  between  advice  and  the  power  of  ini- 
tiating measures  in  Congress.  —  The  object  lesson  for  the  people  in  the 
Washington  domination,  and  its  issue. 

*  I  ^HE  Washington  domination,  which  had  such  a  blighting 
_L  influence  on  speculation  and  business  interests  generally 
during  the  greater  portion  of  the  last  Democratic  regime 
was  so  potent  and  peculiar  in  its  nature  and  results  that  I 
think  it  is  entitled  to  very  serious  inquiry  with  regard  to  its 
causes.  Some  of  these  may  be  at  least  surmised,  if  not  demon- 
strated, by  a  careful  study  of  our  governmental  policy  during 
the  period  of  the  abnormal  conditions  which  so  thoroughly 
upset  the  conventional  methods  of  Wall  Street. 

The  humiliation  of  the  spectacle  was  sad,  but  it  did  not  seem 
to  strike  many  of  the  people  in  that  light.     The  necessities  of 

74 


WASHINGTON   DOMINATION   IN   FINANCE,   ETC.      75 

the  case  were  all  they  appeared  to  regard,  and  they  servilely 
conformed  to  them.  The  power  was  apparently  too  strong  to 
be  opposed,  and  the  authority  too  autocratic  to  be  disputed. 
It  seemed  very  like  a  manifestation  of  hypnotic  influence  on  a 
large  scale. 

At  one  time  the  government  assumed  the  complexion  of 
a  centralizing  bureau  of  financial  information  with  a  censorship 
attachment,  and  though  there  was  no  censorship  publicly  estab- 
lished, yet  it  was  presumable  that  the  news  went  through  a 
secret  sifting  process  under  the  surveillance  of  a  senatorial 
clique  before  it  was  given  out  for  general  distribution.  If  you 
wished  to  avoid  irreparable  mistakes,  you  were  obliged  to  take 
your  cue,  humbly,  from  the  seat  of  government,  while  you  had 
to  be  careful  to  observe  the  adage,  "  Least  said,  soonest 
mended." 

Washington  statesmen  were  at  that  time  more  conspicuous 
in  the  eyes  of  the  business  public,  and  especially  in  senatorial 
circles,  than  they  had  ever  been  before  during  the  history  of 
the  Republic.  Presumably  it  may  be  only  a  symptom  or  char- 
acteristic of  progress ;  for  I  believe  that,  without  close  intimacy 
and  contact  with  Wall  Street,  it  is  impossible  for  the  govern- 
ment to  exhibit  a  healthy  condition  in  some  of  its  most  impor- 
tant concerns.  In  fact,  if  it  were  cut  off  from  Wall  Street, 
emergencies  would  be  liable  to  arise  almost  at  any  time  that 
would  place  it  in  a  state  of  helplessness  though  not  of  "  innocuous 
desuetude  "  ;  for  if  the  government  were  stranded  for  want  of 
money,  the  consequence  would  be  appalling  to  the  nation. 

It  is  fairly  inferable,  and  in  many  instances  it  has  been  demon- 
strated, that  government  is  largely  dependent  on  Wall  Street  in 
all  financial  emergencies,  and  when  the  powers  at  Washington 
assumed  the  ascendency,  it  seemed  to  the  apprehension  of 
acute  financiers  and  old  habitues  of  the  Street  that  the  natural 
order  of  things  had  been  reversed,  and  in  fact  that  "  the  tail 
was  wagging  the  dog." 

It  was  partly,  therefore,  through  failure  of  recognizing  this 
dependence  of  government  on  the  great  center  of  finance  and 
attempting,  instead,  to  exercise  a  domineering  policy  through 


76  THE  WALL   STREET   POINT   OF   VIEW.  , 

the  chicanery  of  a  political  clique,  that  this  temporary  domina- 
tion was  established.  It  was  eventually  a  failure,  and  then  the 
true  attitude  of  the  financial  power  had  to  be  recognized  nolens 
volens. 

As  all  roads  in  the  old  world  were  formerly  said  to  lead  to 
Rome,  so  all  financial  roads  in  America  must  inevitably  lead  to 
Wall  Street.  There  is'  no  way  but  this ;  and  it  is  within  the 
range  of  possibility,  I  may  say  probability,  that  at  the  end  of  a 
similar  period  in  the  unexplored  future,  when  the  Greater  'New 
York  buildings  shall  have  covered  Long  Island,  Staten  Island, 
the  greater  part  of  New  Jersey,  and  extend,  perhaps,  even  unto 
the  Adirondacks,  Wall  Street  will  still  maintain  its  prestige  as 
the  great  loaning  and  financial  center.  Yes,  more,  —  New 
York  may  then  be  the  financial  center  of  the  world ;  for  Macau- 
lay's  New  Zealander  will,  perhaps,  have  arrived  in  the  English 
metropolis  long  ere  that  date,  and  taken  his  stand  on  London 
Bridge  to  sketch  the  ruins  of  St.  Paul's. 

Owing  to  the  legislative  delays  in  regard  to  the  repeal  of 
the  Sherman  Silver  Law,  as  well  as  disappointed  expectations 
regarding  an  anticipated  bond  issue  that  would  have  brought 
partial  relief  if  it  had  been  negotiated  at  an  earlier  date,  peo- 
ple were  kept  in  a  highly  agitated  and  nervous  condition  during 
the  entire  summer  of  1893.  There  had  been  so  much  weary 
waiting  and  worry,  and  the  agony  had  been  so  long  drawn  out, 
that  when  the  relief  came  in  November,  six  months  too  late,  it 
was  no  relief  at  all,  for  the  worst  had  been  done. 

If  Mr.  Cleveland  had  dealt  with  the  subject  in  a  more  posi- 
tive manner  in  his  inaugural  address,  that  might  have  helped 
to  turn  the  tide  of  adversity  before  its  power  had  become  dis- 
astrous, but  an  intense  aversion  to  the  silver  cranks  took  pos- 
session of  his  mind  and  prevented  him  from  taking  the  much 
wider  view  of  the  situation  which  the  emergency  required. 

When  the  President  called  the  special  session  of  Congress  on 
November  i,  1893,  he  had  no  idea  of  the  extent  to  which  his 
"  object  lesson  "  would  spread  before  the  end  of  the  year,  nor 
of  the  devastation  that  would  follow  it.  I  will  even  venture  to 
assert  that  if  the  advice  given  in  a  bulletin,  which  I  published 


WASHINGTON   DOMINATION   IN   FINANCE,   ETC.      77 

about  the  middle  of  that  August,  had  been  taken  by  the  Admin- 
istration, the  ravages  of  the  then  existent  panic  would  have  been 
neither  so  extensive  nor  so  pernicious  as  later  developments 
showed.  The  following  is  a  copy  of  the  bulletin :  — 

"AUGUST  14,  1893. 

"The  object  lesson  which  was  an  attack  against  silver,  really 
caused  the  panic,  the  incentive  being  to  affect  legislation  so  as  to 
bring  about  the  repeal  of  the  authority  of  the  government  to  pur- 
chase silver.  Instead  of  any  attempt  being  made  to  stop  the  panic, 
it  was  permitted  to  make  headway  to  the  point  of  exhaustion,  the 
entire  country  being  absolutely  covered  by  it.  Senator  Hoar  recently 
said  over  his  signature,  that  if  President  Cleveland  had  declared  in 
his  inaugural  address  that  the  full  power  vested  in  him  should  be 
used  to  keep  the  gold  and  silver  money  of  the  country  of  equal  value, 
it  would  have  prevented  the  panic.  I  believe  that  to  be  true.  Or 
if,  at  the  time  Europe  commenced  to  draw  our  gold  away  on  account 
of  a  scare  which  was  founded  on  the  fear  that  we  were  going  to  drift 
to  a  silver  basis,  the  President  had  authorized  the  sale  of  only  a 
moderate  amount  of  United  States  bonds  for  gold,  his  action  would 
have  been  accepted  both  at  home  and  abroad  as  an  evidence  that  our 
government  had  entered  the  world's  contest  for  gold.  That  alone 
would  have  saved  us  from  the  panic ;  but  the  President  did  neither 
of  these  two  things,  and  thus  caused  an  abandonment  of  all  hope  of 
relief  from  the  administration  ;  so  the  panic  has  had  to  continue,  as 
a  natural  sequence,  to  the  point  of  exhaustion.  The  only  hope  left 
is  that  wise  legislative  action  will  come  from  Congress.  It  is  for  that 
reason  that  the  assembling  of  Congress  has  been  so  universally 
desired.  To  restore  confidence,  therefore,  is  now  the  task  which 
that  august  body  has  in  hand.  It  has  a  patriotic  work  to  do,  and 
party  animosities  should  not  be  permitted  to  crop  out  in  any 
direction." 

Notwithstanding  the  plentiful  advice  which  came  not  only 
from  Senator  Hoar  and  myself,  but  also  from  other  quarters, 
the  panic  materialized  because  the  Administration  did  not 
recognize  the  important  fact  in  the  healing  art,  that  prevention 
is  better  than  cure. 

It  may  be  interesting  to  examine  also  how  far  the  Administra- 
tion was  in  harmony  or  otherwise  with  the  requirements  of  the 


78  THE   WALL   STREET   POINT   OF  VIEW. 

Constitution  on  that  occasion.  The  third  section  of  the  second 
article  of  the  Constitution  of  the  United  States  makes  the  fol- 
lowing provision  with  regard  to  the  powers  of  the  President. 
It  says :  — 

"  He  shall  from  time  to  time  give  to  the  Congress  information  of 
the  state  of  the  Union,  and  recommend  to  their  consideration  such 
measures  as  he  shall  judge  necessary  and  expedient.  He  may  on 
extraordinary  occasions  convene  both  Houses,  or  either  of  them, 
and,  in  case  of  a  disagreement  between  them,  with  respect  to  the 
time  of  adjournment,  he  may  adjourn  them  to  such  time  as  he 
shall  think  proper.  He  shall  take  care  that  the  laws  be  faithfully 
executed;  and  shall  commission  all  the  officers  of  the  United 
States." 

It  will  be  observed  by  a  careful  reading  of  this  section  that  it 
confers  immense  powers.  The  Executive  is  the  sole  judge  of 
the  expediency  of  the  measures  which  he  may  think  proper  to 
recommend  to  Congress.  It  is  understood  as  a  matter  of 
courtesy  that  he  will  consult  the  Cabinet  on  such  occasions, 
though  the  section  does  not  say  so.  The  powers  which  it  thus 
confers  were  widely  conceived  and  considered  by  the  Fathers, 
and  according  to  Chief  Justice  Story  were  most  beneficent  in 
their  design.  Commenting  on  the  section  just  quoted,  that 
eminent  jurist  says  :  — 

"  The  first  part,  relative  to  the  President's  giving  information 
and  recommending  measures  to  Congress,  is  so  consonant  with  the 
structure  of  the  executive  departments  of  the  colonial  and  state 
governments,  with  the  usages  and  practice  of  other  free  govern- 
ments, with  the  general  convenience  of  Congress,  and  with  a  due 
share  of  responsibility  on  the  part  of  the  Executive,  that  it  may  well 
be  presumed  to  be  above  all  real  objection.  From  the  nature  and 
duties  of  the  executive  department,  he  must  possess  more  extensive 
sources  of  information,  as  well  in  regard  to  domestic  as  foreign 
affairs,  than  can  belong  to  Congress.  The  true  workings  of  the 
laws,  the  defects  in  the  nature  or  arrangements  of  the  general 
systems  of  trade,  finance  and  justice,  and  the  military,  naval  and 
civil  establishments  of  the  Union,  are  more  readily  seen  by,  and  more 
constantly  under  the  view  of  the  Executive,  than  they  can  possibly 


WASHINGTON   DOMINATION   IN   FINANCE,   ETC.      79 

be  of  any  other  department.  There  is  great  wisdom,  therefore,  in 
not  merely  allowing,  but  in  requiring,  the  President  to  lay  before 
Congress  all  facts  and  information  which  may  assist  in  their  delib- 
erations, and  in  enabling  him  at  once  to  point  out  the  evil,  and  to 
suggest  the  remedy.  He  is  thus  justly  made  responsible,  not  merely 
for  a  due  administration  of  the  existing  systems,  but  for  due  dili- 
gence and  examination  into  the  means  of  improving  them." 

It  will  thus  be  seen,  by  an  intelligent  reading  of  the  section 
itself,  and  a  clear  conception  of  Justice  Story's  remarks  thereon, 
that  one  of  Mr.  Cleveland's  favorite  maxims,  "The  duty  of  a 
President  is  simply  executive,"  hardly  covers  the  case.  Though 
he  has  not  the  power  of  initiating  measures  in  Congress, 
his  authority  in  the  way  of  advice  comes  so  near  it  that  the 
"middle  wall  of  partition"  which  divides  the  two  is  trans- 
parently thin.  Still,  it  is  manifest  that  the  Fathers  must 
have  intended  to  make  a  veiy  clear  distinction  between  the 
assertion  of  the  one-man  power  and  the  "  giving  Congress  in- 
formation of  the  state  of  the  Union,"  as  well  as  the  "  recom- 
mending such  measures  as  the  President  might  consider 
expedient." 

In  his  closing  remarks  on  that  part  of  the  Constitution  which 
defines  the  "  rights,  powers  and  duties "  of  the  executive  de- 
partment, Justice  Story  draws  the  following  inferences  and 
conclusions,  which  are  worthy  of  being  preserved  in  letters 
of  gold :  — 

"  Unless  my  judgment  has  been  unduly  biased,  I  think  it  will  be 
found  impossible  to  withhold  from  this  part  of  the  Constitution  a  tribute 
of  profound  respect,  if  not  of  the  liveliest  admiration.  All  that 
seems  desirable  in  order  to  gratify  the  hopes,  secure  the  reverence, 
and  sustain  the  dignity  of  the  nation,  is,  that  it  (the  executive  depart- 
ment) should  always  be  occupied  by  a  man  of  elevated  talents,  of 
ripe  virtues,  of  incorruptible  integrity,  and  of  tried  patriotism ;  one 
who  shall  forget  his  own  interests,  and  remember  that  he  represents 
not  a  party,  but  the  whole  nation ;  one  whose  fame  may  be  rested 
with  posterity,  not  upon  the  false  eulogies  of  favorites,  but  upon  the 
solid  merit  of  having  preserved  the  glory  and  enhanced  the  pros- 
perity of  the  country." 


80  THE   WALL   STREET   POINT   OF   VIEW. 

What  a  valuable  lesson  for  all  who  aspire  to  the  presidency 
is  contained  in  the  noble  and  comprehensive  language  of  the 
scholarly  jurist,  whose  works  shed  durable  luster  on  the  bench 
of  the  United  States  Supreme  Court  which  he  adorned.  The 
criticism  of  Ben  Jonson  regarding  William  Shakespeare,  in 
literature  and  the  drama,  may  very  appropriately  be  applied 
to  Joseph  Story  in  law,  jurisprudence,  and  ethics.  "  He  wrote 
not  for  the  age,  but  for  all  time." 

But  to  return  to  the  question  of  Washington  domination,  as 
evidenced  in  the  latter  years  of  the  Democratic  regime.  I 
think  I  have  clearly  shown  that  the  assumption  of  the  power 
which  established  for  a  time  that  domination  over  financial 
concerns  and  Wall  Street  affairs  originated  in  a  false  and  mis- 
taken notion  of  both  the  legislative  and  administrative  functions 
of  a  great  republic.  The  experiment  in  both  departments  has 
been  a  costly  one,  but  it  is  now  perhaps  worth  more  than  it  cost 
to  the  people  of  this  nation,  besides  being  of  great  benefit  to  all 
who  read  our  political  history. 


CHAPTER  XII. 

THE  CHIEF  MAGISTRATE. 

Qualifications  indispensable  for  the  highest  office  in  the  land. — Neither  a 
towering  genius  nor  an  offensive  partisan  fit  for  the  position. — The  ulti- 
mate and  crucial  test  of  the  popularity  of  a  President  and  his  consequent 
success,  is  the  material  prosperity  of  the  country.  —  He  has  to  bear  the 
brunt  of  bad  times,  no  matter  how  able  and  good  he  may  be.  —  Failure 
of  Webster,  Clay,  and  Calhoun  to  reach  the  goal  of  their  ambition.  — 
The  nation  sensitive  on  a  President's  errors  in  finance  and  currency. — 
Parallel  between  Jackson  and  Cleveland.  —  Origin  of  the  National  Bank- 
ing System. 

WHEN  we  pass  beyond  the  requirements  cited  by  Chief 
Justice  Story,  opinions  differ  as  widely  as  the  poles 
regarding  the  requisite  qualifications  of  the  man  who  aspires  to 
be  the  Chief  Magistrate  of  this  country.  Yet  there  is  only  one 
opinion  respecting  certain  essential  qualifications  among  all  ra- 
tional men,  irrespective  of  politics  or  previous  training. 

These  essentials  are  frequently  expressed  more  clearly  nega- 
tively than  positively.  For  instance,  there  is  a  deep-rooted 
prejudice  against  those  individuals  who  for  want  of  a  better 
name  are  called  geniuses.  In  the  ordinary  English  dictionary 
the  word  "genius"  is  defined  thus:  "Natural  endowment, 
natural  faculty  or  aptitude  of  mind  for  a  particular  study  or 
course  of  life,  uncommon  powers  of  intellect,  and  especially  of 
inventive  combination,  a  man  endowed  with  such  powers, 
peculiar  character."  The  word,  though  Anglicized,  is  purely 
Latin  without  change  of  spelling.  So,  turning  to  the  Latin 
dictionary,  we  find  the  definition  as  follows  :  "  Genius,  a  good 
or  evil  demon  attending  each  man  or  woman,  or  on  mankind 
in  general,  either  to  defend  or  punish  them."  The  word 
Q  81 


82  THE   WALL   STREET   POINT   OF   VIEW. 

"demon,"  spelled  "daemon  "  in  Latin,  and  in  Greek  "daimon," 
simply  means  a  spirit,  without  designating  its  quality,  but  in 
our  modern  theology  it  means  an  evil  spirit. 

The  common  and  general  acceptation  of  the  term  "  genius  "  is 
a  man  who  can  accomplish  extraordinary  things  without  appear- 
ing to  make  much  effort,  and  who  is  sometimes  without  much 
education.  The  genius  seems  to  possess  by  mysterious  innate 
faculties  what  but  few  others  can  aim  at  by  long  and  laborious 
exertion,  and  a  characteristic  of  the  real  genius  is  that  his  judg- 
ment in  matters  peculiar  to  himself  is  generally  almost  unerring. 
Hence  the  ancient  Greek  theory  and  the  modern  Christian 
doctrine,  that  there  are  always  two  spirits  contending  for  the 
control  of  the  individual. 

It  is  passing  strange,  however,  that  the  people  of  the  United 
States  should  seem  disposed  to  ignore  a  genius  in  their  choice 
of  a  President,  and  it  is  paradoxical  also,  for  the  reason 
that  George  Washington,  the  first  President,  was  undoubtedly 
a  genius  in  the  truest  sense  of  the  term ;  and  the  five  succeed- 
ing Presidents,  John  Adams,  Thomas  Jefferson,  James  Madi- 
son, James  Monroe,  and  John  Quincy  Adams,  were  geniuses 
of  different  orders  and  varieties,  but  all  on  a  pretty  high  plane. 
To  John  Quincy  Adams  succeeded  General  Jackson,  and  he 
was  a  genius  of  such  an  extraordinary  type  and  so  eccentric 
that  to  put  him  in  the  same  category  with  the  others  would 
play  havoc  with  all  the  rules  of  comparison.  Without  means 
and  without  education,  by  force  of  his  indomitable  will  and 
fierce,  untamable  spirit,  he  elevated,  or  rather  forced  himself, 
step  by  step,  to  a  judgeship  and  then  to  the  presidency.  The 
last  step  was  not  so  extraordinary  as  the  preceding  ones,  for, 
as  the  hero  of  New  Orleans,  Jackson  became  a  popular  idol, 
and  the  memory  of  all  his  savage  deeds  was  cast  into  .oblivion 
by  that  overwhelming  victory;  while  the  man  who  supplied 
the  sinews  of  war  for  the  achievement  and  mortgaged  his 
estate  to  do  it  is  hardly  ever  mentioned  in  connection  with 
that  glorious  and  final  triumph  over  British  ascendency.  Had 
not  James  Monroe,  then  Secretary  of  War,  supplied  the  cash 
to  equip  the  expedition,  Jackson's  heroism  would  have  been 


THE   CHIEF   MAGISTRATE.  83 

ineffective,  and  Pakenham  with  his  Peninsular  veterans  would 
have  borne  victorious  laurels  back  to  England. 

After  Jackson,  the  geniuses  appear  to  have  stood  aside  as 
presidential  candidates  until  Abraham  Lincoln  loomed  up,  a 
giant,  and  with  nothing  of  education  but  self-culture.  That 
acquirement  was  his,  however,  to  a  high  degree ;  and  in  this  he 
was  unlike  Jackson,  with  whom  letters  were  either  secondary 
or  ignored  —  though  "  Old  Hickory"  was  not  blameworthy  for 
not  cultivating  a  capacity  and  a  kind  of  talent  which  he  never 
possessed.  If  he  had  been  the  other  kind  of  man,  perhaps 
the  battle  of  New  Orleans  might  have  gone  the  other  way ; 
whereas,  if  Lincoln  had  gone  to  the  front  and  attempted  to 
meet  Pickett's  charge  at  Gettysburg,  or  tried  to  beleaguer 
Vicksburg,  instead  of  permitting  Grant  to  do  so,  slavery  in 
this  country  might  be  a  recognized  institution  to-day.  But 
the  "  daimons  "  that  rule  the  destiny  of  war  decided  matters 
otherwise,  and  we  can  only  abide  by  the  results,  and  in  the 
strength  of  our  national  optimism  go  on  our  national  way  re- 
joicing. 

The  prejudice,  therefore,  against  the  selection  of  a  genius 
for  President  would  seem  to  have  its  origin  in  the  apprehen- 
sion that  he  would  be  likely  to  do  something  extraordinary  that 
might  embroil  the  country  in  war  or  other  trouble,  and,  not 
being  subject  like  an  ordinary  man  to  the  will  and  disposing 
power  of  others,  the  step  for  him  to  a  despotism  would  not  be 
far,  as  in  the  case  of  Napoleon  when,  after  the  fashion  of  Roman 
generals,  he  made  his  election  as  First  Consul  of  France  a 
stepping-stone  to  the  Empire.  A  cardinal  objection  to  a 
genius  for  most  practical  purposes  is  that  he  is  too  self-willed. 
Otherwise  he  would  not  be  a  genius. 

There  is  some  reason  in  this  view  of  the  case,  but  there  is 
another  cause  at  the  bottom  of  the  prejudice.  The  genius 
would  not  be  likely  to  tolerate  the  political  oligarchies  that 
feed  and  exist  on  the  gullibility  of  the  rank  and  file  of  the 
voters.  This  is  probably  the  chief  reason  why  the  strong  man 
is  feared  in  the  presidency,  while,  if  he  is  only  a  bogus  genius 
and  is  trying  to  play  the  part  without  the  capacity,  he  is  a 


84  THE  WALL  STREET   POINT  OF  VIEW. 

proper  object  to  inspire  alarm  in  the  voters,  and  the  indepen- 
dent suffragists  should  spurn  the  charlatan.  But  so  long  as 
"  dark  horses  "  are  fashionable  at  conventions,  and  the  secret 
caucus  is  the  "  power  behind  the  throne,"  it  is  difficult  some- 
times to  avoid  mistakes  in  this  direction.  The  first  half  dozen 
Presidents  had  no  need  of  caucuses  and  other  modern 
methods  in  politics.  They  had  nearly  all  gained  a  great  repu- 
tation as  statesmen,  with  extensive  experience  both  foreign 
and  domestic.  They  were,  most  of  them,  profound  scholars, 
for  their  times,  and  though  several  had  been  raised  in  the  lap 
of  luxury,  they  never  shirked  the  very  hardest  labor  and  fatigue 
incident  to  the  duties  of  the  office.  In  fact,  in  every  office 
which  they  had  filled  prior  to  the  presidency,  they  had  been 
found  to  be  harder  workers  than  those  obliged  to  toil  for  a  living 
from  their  earliest  boyhood. 

Another  qualification  for  President  is  that  he  should  not  be 
an  "  offensive  partisan."  On  this  subject  George  Washington 
has  left  on  record  some  of  the  best  counsel  to  be  obtained  in  all 
the  annals  of  political  wisdom.  Speaking  of  "  combinations  and 
associations  "  organized  for  party  purposes,  the  first  President 
deplores  their  tendency  to  strike  at  the  root  of  some  of  the 
fundamental  principles  of  a  stable  government  He  says  :  — 

"They  serve  to  organize  faction,  to  give  it  an  artificial  and 
extraordinary  force  —  to  put  in  the  place  of  the  delegated  will  of  the 
nation  the  will  of  a  party,  often  a  small  but  artful  and  enterprising 
minority  of  the  community,  and,  according  to  the  alternate  triumphs 
of  different  parties,  to  make  the  public  administration  the  mirror  of 
the  ill-concerted  and  incongruous  projects  of  faction  rather  than  the 
organ  of  consistent  and  wholesome  plans  digested  by  common 
councils  and  modified  by  mutual  interests." 

If  this  party  spirit,  denounced  in  these  strong  terms  by  the 
Father  of  our  Country,  is  such  an  evil  factor  in  politics  gen- 
erally, it  must  be  very  bad  when  manifested  in  a  candidate  for 
the  chief  magistracy ;  and  the  aspirant  possessed  of  tendencies 
so  dangerous  to  the  peace  and  safety  of  the  nation  should  be 
shunned  by  all  good  people  who  wish  to  see  our  political  insti- 


THE   CHIEF   MAGISTRATE.  85 

tutions  brought  up  to  the  full  measure  of  purity  and  perma- 
nency. 

In  pursuing  this  subject  still  farther,  the  man  who  was  "  first 
in  the  hearts  of  his  countrymen  "  adduces  the  idea  that  repub- 
lics, above  all  other  kinds  of  government,  have  most  to  fear 
from  this  "  offensive  partisanship."  In  his  remarks  he  displays 
at  once  the  deep  insight  of  the  philosopher,  the  breadth  of 
vision  peculiar  to  the  statesman  and  diplomatist,  and  the  keen 
perception  of  the  practical  politician.  Therefore,  Washington 
decidedly  was  a  genius,  as  judged  by  this  expansive  range  of 
mental  vision  and  faculty  for  combinations.  He  says :  — 

"The  spirit  of  party,  unfortunately,  is  inseparable  from  our 
nature,  having  its  root  in  the  strongest  passions  of  the  human 
mind.  It  exists  under  different  shapes  in  all  governments,  more  or 
less  stifled,  controlled,  or  repressed,  but  in  those  of  the  popular  form 
it  is  seen  in  greatest  rankness  and  is  truly  their  worst  enemy.  The 
alternate  domination  of  one  faction  over  another,  sharpened  by 
the  spirit  of  revenge  natural  to  party  dissension,  which  in  different 
ages  and  countries  has  perpetrated  the  most  horrid  enormities,  is 
itself  a  frightful  despotism.  This  leads  at  length  to  a  formal  and 
permanent  despotism.  The  disorders  and  miseries  which  result, 
gradually  incline  the  minds  of  men  to  seek  security  and  repose  in 
the  absolute  power  of  an  individual,  and  sooner  or  later  the  chief  of 
some  prevailing  faction,  more  able  or  more  fortunate  than  his  com- 
petitors, turns  this  disposition  to  the  purposes  of  his  own  elevation 
on  the  ruins  of  public  liberty." 

A  careful  study  of  these  precious  words  of  Washington  win 
partly  explain,  even  in  our  times,  why  a  genius,  in  the  present 
condition  of  political  parties  with  their  factions  and  their 
jealousies,  is  not  a  desirable  person  for  President.  In  the  first 
instance,  the  right  kind  of  genius,  which  presupposes  moral 
worth  of  the  highest  type,  could  have  little  or  no  sympathy  with 
constituents  of  this  character,  and  opposing  repellent  forces  are 
generally  mutual  in  their  action  and  reaction.  These  consid- 
erations and  causes  may,  to  some  extent,  account  for  the  failure 
of  Henry  Clay,  Daniel  Webster,  John  C.  Calhoun  and  others, 
to  reach  the  goal  of  what  was  popularly  supposed  to  have  been 


86  THE   WALL   STREET   POINT  OF   VIEW. 

their  life-long  and  highest  ambition.  It  is  probable,  however, 
that  there  is  a  great  deal  of  popular  misconception  about  the 
depressing  effect  that  the  disappointment  left  on  the  minds  of 
these  great  statesmen.  It  is  often  flippantly  remarked  that 
Webster  died  of  grief,  from  discomfiture  and  from  pondering 
on  his  blighted  hopes,  but  it  appears  that  Webster  was  a  man 
of  too  many  intellectual  resources  to  succumb  to  grief  on  this 
account,  and  he  lived  up  to  the  Scriptural  limit  of  three  score 
and  ten,  while  his  great  contemporary,  Clay,  died  the  same 
year  (1852)  at  the  ripe  age  of  seventy-five.  Both  obtained 
renown  that  any  President  might  envy,  and  several  did  envy. 
The  probability  is  that  the  fame  of  Webster  rests  on  a  more 
'secure  basis  than  it  would  had  he  reached  the  presidential 
chair.  The  durable  reputation  which  his  last  great  patriotic 
speech  in  the  Senate  on  the  Missouri  Compromise  gained  for 
him,  could  hardly  have  been  enhanced  by  any  presidential 
honors. 

In  order  to  be  a  popular  President  the  incumbent  of  that 
office  must  be  a  diplomat  of  such  a  character  as  to  enable  the 
country,  if  possible,  to  be  at  peace  with  all  other  nations,  except 
when  a  real  casus  belli  arises,  and  then  the  people  should 
be  fully  satisfied  as  to  the  justice  and  expediency  of  -their 
side  of  the  dispute,  as  in  our  late  war  with  Spain.  An  error 
in  diplomacy  is  a  most  fruitful  cause  of  business  depression 
and  financial  disaster,  as  our  international  business  relations 
now  stand.  It  is  therefore  fatal  to  the  popularity  of  a  Presi- 
dent, as  all  the  blame  falls  on  him  owing  to  his  prominence 
no  matter  who  else  should  justly  share  it ;  popular  fury  must 
have  an  object  to  aim  at,  and  the  most  shining  mark  it  can 
select  is  the  Executive  of  the  nation.  The  public  do  not  take 
time  to  measure  and  calculate  nice  distinctions.  The  question 
for  the  majority  of  them  is  :  Does  this  affair  in  politics  or 
diplomacy  make  it  harder  to  get  along  in  the  world  and  obtain 
a  living?  When  international  trouble  is  threatened,  all  are 
pinched  before  they  get  time  to  think  why,  and  it  is  with 
the  common  laborer  as  with  the  wealthy  financier.  When  the 
landlord  calls  for  his  rent  at  the  first  of  the  month,  and  the 


THE   CHIEF   MAGISTRATE.  87 

wife  tells  her  husband  about  it,  the  latter  asks  :  "  Why,  what  is 
the  meaning  of  this  ?  He  never  used  to  be  this  way  before, 
if  it  ran  on  into  the  next  month." 

"  Well,  he  says  he  needs  the  money,"  she  replies. 

This  conversation  has  hardly  been  concluded  when  the  little 
girl  comes  in  from  the  grocery  store,  and  says,  "Here's  the 
grocer's  bill,  and  he  says  he  wants  the  money  right  off." 

"  Why,  what's  the  matter  with  him  ?  Does  he  think  we  are 
going  to  run  away  ?  " 

Johnny  next  arrives  from  the  butcher's,  and  says :  "  The 
butcher  told  me  to  bring  the  money  with  me  the  next  time  I 
came.  He  says  he  can't  give  any  more  trust." 

By  this  time  husband  and  wife  are  both  terribly  confounded, 
and  begin  to  imagine  that  some  enemy  is  playing  a  practical 
joke  upon  them.  Then  it  begins  to  dawn  gradually  upon  the 
mental  vision  of  the  husband  that  he  has  heard  some  talk  about 
a  war  message,  and  that,  he  thinks,  has  given  rise  to  all  the 
trouble.  But  this  is  not  all.  When  the  husband  comes  home 
from  his  work  on  Saturday  night,  he  hands  his  money  over  to 
his  wife  as  usual.  She  looks  at  it,  and  says :  "  Where  is  the 
rest  of  it  ?  "  He  answers,  "  That's  all  I  got.  The  boss  says 
money  is  tight.  He  has  laid  off  one  third  of  the  hands,  and 
others  with  myself  will  be  put  on  half  time  next  week." 

The  speculator  calls  on  his  broker,  and  says,  "  How  about 
those  shares  ?" 

"What  shares?" 

"  Oh,  you  know." 

"Let  me  see,"  says  the  broker.  "What  margin  had  you 
up?" 

"  Five  per  cent.,"  confidently  replies  the  customer. 

"Yes,  my  dear  sir,"  sorrowfully  rejoins  the  broker,  "but  that 
stock  has  declined  ten  points." 

"  And  am  I  wiped  out?  "  queries  the  irate  customer. 

"Well,  of  course,"  says  the  broker,  "you're  no  tyro  in 
dealing  in  stocks,  and  you  were  notified  like  others  that  more 
margin  was  required  if  you  desired  to  hold  on  to  your  pur- 
chase." 


88  THE  WALL   STREET   POINT   OF  VIEW. 

The  customer,  after  being  partially  convinced  that  the  broker 
has  done  his  duty  in  the  premises,  restrains  his  ire  and  begins 
to  ask  about  the  cause  of  all  the  trouble. 

"Well,"  replies  the  broker,  who  is  in  sympathy  with  the 
Administration,  "you  have  heard  about  that  matter  in  which 
our  national  honor  was  involved —  " 

"  National  honor  be  blowed  ! "  ejaculates  the  furious  cus- 
tomer, again  lapsing  into  his  tone  of  irritability  and  abuse.  "  I 
want  my  money  back." 

"  Well,  you  see,"  continues  the  broker,  "  a  difference  of 
opinion  arose  between  our  Secretary  of  State  and  Lord  Salis- 
bury, the  Premier  of  Great  Britain,  and  —  " 

"Ah  !  Now,  my  dear  sir,  what  are  you  giving  us?  I  have 
nothing  to  do  with  politics  or  the  foreign  affairs  of  the  govern- 
ment, and  I  don't  see  how  it  can  affect  stocks  and  my  margin 
in  that  way." 

The  experience  of  the  banker  is  the  same.  A  man  calls  for 
an  accommodation,  and  offers  collateral  similar  to  that  which 
has  been  taken  without  hesitation  on  other  occasions.  When 
the  cashier  asks  him  for  more  or  some  of  a  better  quality,  he 
is  surprised,  and  feels  offended  that  his  credit  is  beginning  to 
be  held  cheap.  When  he  is  told  that  securities  have  depre- 
ciated within  a  day  or  two  since  his  last  visit  to  the  bank,  he 
can  hardly  realize  it.  Thus  it  is  that  the  collapse  in  confidence 
extends  its  influence  throughout  all  the  ramifications  of  trade, 
both  small  and  great,  and  the  blame  everywhere  is  hurled  at 
the  head  of  the  President.  The  people  quoted  as  examples, 
together  with  a  great  many  others,  some  of  whom  are  far 
more  intelligent  about  cause  and  effect,  can  see  only  their 
own  side  of  the  question  and  the  side  that  affects  their 
pockets. 

It  is  an  old  saying  that  the  nearest  way  to  a  man's  heart  is 
through  his  pocket,  and  there  may  be  a  mutual  attraction  be- 
tween the  two  that  science  has  not  yet  discovered,  even  by 
the  aid  of  the  X-rays.  However  this  may  be,  the  influence 
over  the  feelings  is  stronger  than  any  other  of  an  earthly 
nature. 


THE   CHIEF   MAGISTRATE.  89 

There  is  an  old  proverb  frequently  quoted  referring  chiefly 
to  newly  married  people  whose  worldly  goods  are  scanty.  It 
says,  "  When  poverty  comes  in  at  the  door,  love  flies  out  at  the 
window."  The  same  idea  would  seem  to  hold  good  in  refer- 
ence to  patriotism.  A  man  can  sing  the  "  Star-Spangled  Ban- 
ner,'' or  "  Hail  Columbia,"  with  far  more  gusto  after  a  good 
beefsteak,  than  when  he  is  on  short  rations.  It  is  difficult  to 
attune  the  mind  to  the  sympathetic  air  of  a  national  anthem 
under  the  last  named  conditions.  Although  the  mind  has 
great  power  over  the  body,  usually,  the  animal  part  of  our 
existence  is  liable  to  succumb  when  not  duly  nurtured,  and  its 
influence  then  on  the  mental  part  of  our  organization  is  not 
the  most  salutary. 

But  nothing  can  explain  to  the  people  a  failure  of  prosperity 
that  has  happened  through  any  incapacity  on  the  part  of  the 
Executive  to  deal  with  the  currency  system.  The  people,  it 
would  seem,  have  always  shown  the  deepest  displeasure  toward 
a  President  guilty  of  any  shortcoming  of  this  character.  It  was 
so  in  the  time  of  General  Jackson,  whose  two  terms  stand  out 
in  bold  relief  both  for  signal  and  successful  achievements  as 
well  as  for  conspicuous  errors,  failures,  and  defeats.  The  worst 
of  the  general's  mistakes,  perhaps,  from  the  point  of  view  now 
under  consideration,  was  his  stubborn  opposition  to  the  renewal 
of  the  charter  of  the  United  States  Bank,  which  had  done  very 
fair  financial  service  for  thirty-six  years,  considering  the  times 
and  the  difficulties  in  banking  in  those  days.  The  charter  had 
four  more  years  to  run  when  Jackson  was  elected  the  second 
time,  in  1832,  and  both  Houses  of  Congress  passed  a  bill  to 
renew  it.  This  was  vetoed  by  the  President,  who  also  was 
guilty  of  the  high-handed  act  of  removing  the  funds  to 
certain  favorite  State  banks,  against  the  most  solemn  and 
eloquent  protests  of  Daniel  Webster  and  others  in  the  Senate, 
who  declared  that  the  act  of  removal  was  an  illegal  encroach- 
ment. 

Jackson,  however,  insisted  on  having  his  own  way,  and  the 
result  of  withdrawing  so  much  money  from  an  institution  that 
had  the  confidence  of  the  greater  number  of  the  people  and 


90  THE   WALL   STREET   POINT   OF  VIEW. 

putting  it  into  several  other  concerns  that  were  not  generally 
regarded  as  trustworthy,  had  its  inevitable  result.  A  panic 
ensued,  followed  by  widespread  financial  disaster,  and  the 
President's  pet  banks  began  to  inflate  their  paper  and  were 
unable  to  meet  the  runs  on  the  money  that  had  been  taken 
from  the  big  bank  and  deposited  with  them.  Jackson  afterward 
recovered  a  part  of  his  popularity  by  the  determined  stand  he 
took  against  John  C.  Calhoun  and  his  confreres  on  the  subject 
of  "  nullification  " ;  but  people  retained  a  horror  of  him  and 
were  possessed  with  dread  lest  he  might,  by  some  mishap,  get 
another  opportunity  of  tinkering  with  the  public  finances. 

There  seem  to  be  some  points  of  parallelism  between  Gen- 
eral Jackson  and  Mr.  Cleveland,  both  in  the  circumstances  of 
their  advent  to  office  and  in  their  arbitrary  methods.  They 
both  sailed  into  office  on  the  crest  of  the  highest  wave  of 
popularity,  and  their  interference  with  the  legislative  branch 
of  the  government  turned  the  tide  of  that  popularity. 

But  the  evil  that  Jackson  did  in  the  financial  affairs  of  the 
nation  lived  after  him.  Jackson  left  his  opinions  on  finance  to 
Van  Buren  as  a  legacy  which  was  afterward  the  chief  instru- 
ment in  creating  the  panic  of  1837,  which  has  been  fully  de- 
scribed in  my  book, "  Twenty-eight  Years  in  Wall  Street."  A 
makeshift  Treasury  Bill  was  passed  which  afforded  temporary 
relief,  but  every  effort  to  restore  the  charter  of  the  United 
States  Bank  was  defeated  by  the  presidential  party. 

Financial  hope  gleamed  for  a  short  time  above  the  horizon 
of  party  spirit  when,  after  the  election  of  William  Henry  Har- 
rison in  1840,  Daniel  Webster  was  appointed  Secretary  of  State, 
and  a  bill  was  passed  by  both  Houses,  providing  for  the  restora- 
tion of  the  charter  of  the  United  States  Bank ;  but  Harrison 
died  a  month  after  his  inauguration,  and  Vice- President  Tyler 
succeeded  him  in  the  presidency.  Tyler  had  inherited  the 
legacy  of  political  State  banking,  by  a  kind  of  law  of  primogeni- 
ture, from  Father  Jackson  through  his  politically  adopted  heir, 
Van  Buren,  and  so  he  vetoed  the  bill.  While  this  bank  was 
not  all  that  could  be  desired,  yet  it  was  much  better  than  the 
State  banks  by  which  it  was  superseded. 


THE   CHIEF   MAGISTRATE.  91 

It  thus  will  be  seen,  from  the  foregoing  instances  and  com- 
ments, that  the  Chief  Magistrate  has  far  greater  power  in 
ordering  the  financial  affairs  of  the  nation  than  is  commonly 
supposed.  He  seldom  keeps  within  the  limits  of  purely  execu- 
tive duty ;  circumstances  seem  to  force  him  farther,  often,  per- 
haps, in  spite  of  himself. 


CHAPTER  XIII. 

THE  CLEVELAND  ADMINISTRATION  —  FIRST  TERM. 

An  excellent  beginning  with  the  best  intentions.  —  Large  promises,  but 
small  performances.  —  Purposes  regarding  Civil  Service  Reform.  —  The 
theory  was  Jeffersonian,  but  the  condition  was  Jacksonian.  —  The  famous 
"  Tariff  Message  "  of  Mr.  Cleveland.  —  "A  Condition,  not  a  Theory."  — 
How  the  purchase  of  a  yard  of  calico  confounds  his  theory  and  pet 
arguments  in  favor  of  free  trade.  —  Mr.  Cleveland's  free-trade  principles 
would  bestow  our  home  markets  on  foreign  manufacturers  and  reduce 
our  own  workmen  to  indigence. 


ROVER  CLEVELAND  made  a  good  beginning  as  Chief 
Executive.  He  was  a  devoted  advocate  of  Civil  Service 
Reform,  and  I  have  no  doubt  that  at  first  he  thought  his 
administration  capable  of  making  his  theory  and  practice  har- 
monize. The  keynote  of  his  avowed  policy  in  that  particular 
was  embraced  in  the  following  sentence  from  his  letter  of 
acceptance  for  the  first  term  :  "  The  selection  and  retention 
of  subordinates  in  government  employment  should  depend 
upon  their  ascertained  fitness  and  the  value  of  their  work." 
The  whole  gravamen  of  Civil  Service  Reform  is  contained  in 
this  sentence,  and  the  merit  system  is  clearly  set  forth. 

But  Mr.  Cleveland  did  not  think  that  this  expression  of  his 
views  and  intentions  was  quite  strong  enough  to  make  clear  his 
hatred  of  official  bossism  and  political  corruption,  and,  in  a 
speech  made  some  time  afterward,  he  put  himself  on  record 
in  a  way  that  could  leave  no  doubt  in  any  candid  mind  that,  so 
far  as  he  was  concerned,  the  mere  office  seeker  should  have  no 
show  in  his  administration  and  the  political  trickster  no  "pull"  ; 
and  that  the  time-honored  Jacksonian  doctrine,  "  To  the  victors 
belong  the  spoils,"  should  henceforth  be  regarded  as  a  relic 

93 


CLEVELAND   ADMINISTRATION  — FIRST   TERM.      93 

of  semi-barbarism,  having  no  place  in  an  enlightened  political 
system. 

Mr.  Cleveland  said :  "  Let  there  be  an  opportunity  offered 
to  the  people  for  a  change  of  parties  of  such  a  kind  that  the 
victors  must  give  up  all  idea  of  a  general  distribution  of  offices 
among  their  adherents,  and  the  people  will  joyfully  agree  to  it." 

"A  Daniel  come  to  judgment,"  or  words  to  that  effect,  cried 
many  who  heard  or  read  that  speech.  "Here  is  a  man,"  they 
said,  "  for  the  first  time  since  the  days  of  Lincoln  who  has  the 
courage  to  combat  the  spoils  system." 

The  post-office  was  the  place  where  the  first  test  came,  in  the 
attempt  to  work  out  Civil  Service  Reform  practice  in  accordance 
with  the  theory ;  and  it  must  be  admitted  that  the  test  proved 
a  failure,  though  Civil  Service  Reform  rules  and  principles  were 
respected  in  some  cases  by  virtue  of  what  is  known  as  the  four- 
years'  rule.  For  instance,  Mr.  Pearson  remained  postmaster  at 
New  York.  The  main  pretext  for  displacing  post-office  offi- 
cials was  "offensive  partisanship,"  a  phrase  which  has  become 
universally  applicable  to  cases  of  prejudice  in  politics. 

Then  from  the  post-office  department  a  system  of  espionage 
spread  all  over  the  country,  until  politics  and  political  patronage 
in  this  country  sank  to  a  low  condition  of  degeneracy.  The 
office-seeking  politicians  bore  down  upon  the  administrative 
forces,  which  were  unequal  to  successful  resistance.  Whole 
departments  were  demoralized  and  broken  up  to  serve  the 
rapacity  of  the  office  seekers ;  and  even  a  large  number  of  the 
employe's  of  the  railway  mail  service  were  discharged  through 
the  secret  espionage  plan,  and  their  places  filled  by  others. 

A  prominent  Southern  senator  and  his  following  constituted 
one  of  the  strongest  forces  with  which  the  President  had  to 
contend,  in  their  interference  with  his  nominations  and  in 
various  irritating  ways  known  only  to  the  trickery  of  profes- 
sional politics.  This  Southern  faction  had  great  influence 
throughout  the  entire  term,  and  exercised  their  power  for 
mischief  in  tying  the  President's  hands  by  interfering  with 
some  of  the  most  important  functions  of  his  office.  We  can 
now  see  that  there  were  many  extenuating  circumstances  sur- 


94  THE   WALL   STREET   POINT  OF  VIEW. 

rounding  some  of  his  actions,  where  a  superficial  observer 
might  imagine  the  President  was  blameworthy.  This  was 
notably  the  case  in  dealing  with  the  Southern  faction,  which 
took  great  pride  in  its  influential  power,  and  whose  methods 
must  have  been  very  irritating  to  Mr.  Cleveland. 

The  theory  of  the  Cleveland  administration  in  its  official 
appointments  was  Jeffersonian,  its  motto  being,  "  Is  he  honest, 
is  he  capable?"  The  practice,  however,  was  largely  Jack- 
sonian,  its  motto  being,  "  To  the  victors  belong  the  spoils." 

Let  us  now  glance  at  Mr.  Cleveland's  famous  tariff  message 
of  December,  1887,  for  which  it  is  claimed  he  was  personally 
responsible.  When  that  document  appeared  it  gave  rise  to  a 
flood  of  criticism,  both  favorable  and  hostile.  It  was  con- 
sidered one  of  Mr.  Cleveland's  best  literary  efforts,  and  some 
of  its  sharp  hits  have  had  a  wonderful  currency  in  the  news- 
papers, particularly  the  saying,  "  It  is  a  condition  which  con- 
fronts us  —  not  a  theory."  The  condition  was  too  much 
money  in  the  Treasury.  That  condition  has  not  given  any 
trouble  since  a  short  time  after  that  message.  The  great 
difficulty  for  a  few  years  past  has  been  a  deficit  in  the  Treas- 
ury, and  the  problem  has  been  how  to  meet  it.  It  was 
reserved  for  the  McKinley  administration  to  solve  that  problem. 

The  burden  of  the  tariff  message  was  an  overflowing 
Treasury,  which  was  constantly  becoming  more  plethoric,  and, 
like  the  Augean  stables,  filling  up  twice  as  fast  as  it  was  emptied. 
Our  presidential  Hercules,  as  stated  in  the  message,  did  all 
that  was  in  his  power  to  remedy  the  situation.  He  bought 
bonds,  and  did  everything  in  that  line  which  the  law  allowed. 
Still  the  currency  surplus  would  not  down,  but  kept  accumu- 
lating until  it  had  reached  the  dangerous  figure  of  $140,000,000, 
when  Mr.  Cleveland  scented  panic  in  the  air.  There  would 
surely  be  a  commercial  smash-up,  he  soliloquized,  if  that 
Treasury  were  not  depleted  or  at  least  a  vein  opened  some- 
where to  relieve  the  congestion.  The  Treasury's  great  need 
was  really  gold  and  not  currency  at  this  time.  The  trouble 
lay  in  a  redundancy  of  the  former  and  a  dearth  of  the  latter. 
A  high  tariff,  in  Mr.  Cleveland's  opinion,  was  responsible  for 


CLEVELAND   ADMINISTRATION  — FIRST  TERM.     95 

the  desperate  condition  of  affairs,  and,  according  to  the  mes- 
sage, the  country  was  on  the  very  brink  of  commercial  ruin. 
This  was  the  honest  theory  of  the  President,  and,  irrespective 
of  politics,  he  had  a  host  of  followers  of  the  same  financial 
belief. 

That  message  was,  as  I  have  suggested,  more  remarkable 
for  its  literary  excellence  than  for  the  soundness  of  its  economic 
views.  It  is  partly  as  a  literary  and  partly  as  a  historic  docu- 
mentary reminiscence  that  it  seems  worth  analyzing  now, 
for  its  economic  views  are  somewhat  unique,  and  show  how 
much  Mr.  Cleveland  had  to  learn  upon  the  tariff  question. 
No  doubt  he  has  profited  by  the  two  great  object  lessons,  the 
McKinley  Bill  and  the  Wilson  Bill,  which  he  has  in  some 
measure  been  forced  to  study  since  then. 

To  show  how  mistaken  his  notions  were  regarding  the  prac- 
tical result  of  tariff  laws,  I  quote  the  following  from  the  mes- 
sage :  "  These  laws,  as  their  primary  and  plain  effect,  raise  the 
price  to  consumers  of  all  articles  imported  and  subject  to 
duty,  by  precisely  the  sum  paid  for  such  duties.  Thus  the 
amount  of  the  duty  measures  the  tax  paid  by  those  who  pur- 
chase for  use  those  imported  articles." 

Mr.  Cleveland  could  have  had  this  argument  answered  prac- 
tically and  refuted  by  the  simple  operation  of  purchasing  a 
yard  of  calico  at  5  cents,  and  then  looking  in  the  list  of  tariff 
prices,  and  finding  that  the  tariff  upon  a  yard  of  calico  was 
6  cents.  Of  course  Mr.  Cleveland  would  say  he  must  pay 
it  cents  for  it.  "Oh,  no,"  the  dry-goods  man  would  answer, 
"we  don't  charge  two  prices.  This  is  a  one-price  house." 
The  dry-goods  man  might  further  reply  :  "  It  is  a  condition  that 
confronts  us  —  not  a  theory.  Your  theory  is  1 1  cents ;  our 
price  is  5."  The  same  rule  applies  in  the  majority  of  instances. 

Mr.  Cleveland  made  a  mistake  in  thinking  that  the  consumer 
pays  the  tariff  tax,  when  it  is  really  the  producer  or  the  seller 
who  pays  it,  or  it  may  be  divided  between  producer  and  con- 
sumer. But  it  would  be  much  more  difficult  to  make  Mr. 
Cleveland  or  any  free-trader  understand  this  than  the  calico 
transaction,  which  is  simple  and  easily  demonstrable. 


96  THE  WALL   STREET   POINT   OF  VIEW. 

Here  is  another  point  on  which  Mr.  Cleveland  required 
enlightenment.  He  said :  "  Nor  can  the  worker  in  manu- 
factures fail  to  understand  that  while  a  high  tariff  is  claimed  to 
be  necessary  to  allow  the  payment  of  remunerative  wages,  it 
certainly  results  in  a  very  large  increase  in  the  price  of  nearly 
all  sorts  of  manufactures,  which,  in  almost  countless  forms,  he 
needs  for  the  use  of  himself  and  family." 

This  is  another  instance  in  which  the  "  condition "  is  at 
variance  with  the  theory.  There  may  be  a  few  instances  in 
which  "  the  tariff  results  in  an  increase  in  price,"  but  the  rule 
is  by  no  means  general,  and  the  increase  is  not  "  large,"  and 
where  it  does  exist,  the  higher  wages  cover  it  several  times 
over.  Under  any  approach  to  free  trade,  the  "  increase  "  in 
the  foreign  goods  would  soon  be  twice  as  much.  This  has 
been  often  demonstrated,  and  was  first  clearly  explained  to  the 
people  of  this  country  by  Horace  Greeley  more  than  fifty  years 
ago. 

Mr.  Cleveland  seemed  to  have  got  it  into  his  head  that  our 
manufacturers  are  grinding  monopolists,  and  that  they  corral 
very  large  profits,  quite  forgetting,  apparently,  that  foreign 
manufacturers  are  not  better  than  they  in  this  respect,  and 
perhaps  not  so  good.  Under  his  system  of  "reduced  taxa- 
tion," as  he  called  it  then,  we  would  permit  the  British  manu- 
facturer to  take  the  profits  instead  of  our  own  manufacturer. 
It  is  easy  to  see  the  great  difference  it  makes  to  us  as  a  people 
in  having  the  money  we  pay  for  clothing  and  many  other  neces- 
sities spent  in  this  country  instead  of  its  being  spent  abroad. 
The  money  spent  here  goes  to  enrich  us  all  permanently,  and 
we  get  what  we  need  for  it  besides ;  but  what  goes  abroad  we 
derive  no  further  benefit  from,  and  it  impoverishes  our  coun- 
try to  the  extent  of  that  sum.  The  most  unpatriotic  people, 
therefore,  are  those  who  purchase  foreign  goods  (except  upon 
reciprocity  principles),  provided  they  can  get  what  they  want 
at  home. 

The  theory  and  ideas  of  tariff  reform,  according  to  the  free- 
traders, would  munificently  bestow  our  home  markets,  which 
take  90  per  cent,  of  our  products,  upon  the  competing  foreigner, 


CLEVELAND   ADMINISTRATION  — FIRST  TERM.     97 

without  any  compensation,  except,  perhaps,  a  cheaper  suit  of 
clothes  once  a  year  or  so,  which  the  impoverished  laborer  would 
hardly  be  able  to  purchase,  as  all  his  surplus  wages  would  be 
divided  between  the  foreign  manufacturer  and  the  pauper 
employes  of  this  foreign  prot£g6  of  our  free-traders.  I  know 
that  Mr.  Cleveland  would  never  admit  that  he  is  in  favor  of 
free  trade  out  and  out,  and  he  may  honestly  believe  that  he  is 
not;  but  no  fair-minded  person  can  read  his  messages,  his 
severe  criticisms  against  protection,  and  his  bitter  denunciations 
of  its  adherents,  without  being  forced  to  the  conclusion  that  he 
is  one  of  the  most  uncompromising  free-traders.  His  saving 
remnant  of  protection  suggests  the  Kentucky  colonel's  mix- 
ture of  water  with  his  whiskey.  The  Kentuckian  had  a  deep- 
seated  prejudice  against  taking  his  whiskey  straight,  or  at  least 
of  being  considered  to  do  so,  and  when  he  would  fill  his  glass 
of  Bourbon  to  the  very  brim,  he  would  say  to  the  waiter,  "  Now, 
John,  take  that  glass,  keep  a  steady  hand,  mind  you,  and  just 
pour  in  one  drop  of  water,  just  one  drop."  Mr.  Cleveland's 
alleged  remnant  of  protection,  whatever  it  is,  is  like  the  Ken- 
tuckian's  drop  of  water,  which  he  mixed  with  his  Bourbon  in 
order  to  preserve  the  consistency  of  his  prejudice. 


CHAPTER  XIV. 

THE  HARRISON  ADMINISTRATION. 

Its  influence  on  some  of  the  consequences  of  the  Baring  panic.  —  The 
absence  of  "  Jingoism "  was  a  conspicuous  feature  of  the  Harrison 
regime.  —  Harrison  as  an  orator.  —  His  Western  trip  compared  with  the 
Eastern  trip  of  Bryan.  —  His  astonishing  familiarity  with  all  the  States 
and  their  conditions,  and  his  magnetic  power  over  audiences,  as  dis- 
played in  Western  cities. — A  thorough  politician  and  a  far-seeing 
statesman.  — His  cooperation  with  James  G.  Elaine  in  devising  the 
wise  policy  of  reciprocity  which  was  spoiled  by  the  Democrats. 

r  I  "'HE  Baring  failure,  though  its  influence  for  universal  evil 
\_  was  checked  (as  shown  in  another  chapter)  by  the  able 
management  of  Mr.  Lidderdale,  who  was  the  chief  instrument 
in  adroitly  using  the  power  and  funds  of  the  Bank  of  England 
to  avert  a  very  extensive  panic,  was  nevertheless  followed  by  an 
unhappy  aftermath,  the  effects  of  which  were  severely  felt  on 
this  side  of  the  Atlantic. 

Things  might  have  been  much  worse  here,  however,  except 
for  two  fortunate  circumstances.  One  of  these  was  the  sound 
condition  of  our  banks  and  the  systematic  management  of  the 
Clearing  House  which,  in  any  threatened  emergency  or  extraor- 
dinary tightness  in  the  money  market,  issues  certificates  to 
tide  over  the  trouble.  The  other  circumstance  was  that  we 
were  blest  with  one  of  the  best  administrations  that  we  have 
had  since  the  days  of  Washington  and  Lincoln. 

The  Harrison  administration  stands  out  in  bold  relief  as  one 
of  the  greatest  in  the  history  of  the  Republic.  It  was  charac- 
terized by  honesty  and  economy.  In  it  Jingoism  was  conspic- 
uous by  its  absence.  It  was  too  thoroughly  American  for  that, 
and  it  sought  no  recognition  from  abroad.  It  did  not  seek  to 
elevate  itself  into  public  notice  by  any  display  of  cheap  sensa- 

98 


THE   HARRISON   ADMINISTRATION.  99 

tionalism.  It  was  thoroughly  unostentatious,  and,  avoiding  all 
entangling  alliances  according  to  the  advice  of  Washington, 
attended  strictly  to  domestic  business,  which  it  looked  after 
with  constant  assiduity. 

The  last  year  of  the  Harrison  administration,  1892,  was  one 
of  the  most  prosperous  in  the  history  of  the  country,  and,  if 
General  Harrison  had  been  reflected  there  is  every  reason  to 
believe  that  the  same  conditions  would  have  continued.  It 
would  have  been  a  continuous  chain  without  a  break ;  but  when 
Harrison  left  the  White  House  the  scene  was  changed. 

General  Harrison  had  not  long  taken  his  departure  when  the 
ominous  forebodings  of  the  Wilson  Bill  took  hold  of  the  minds 
of  the  people.  What  was  the  result  ?  Our  manufacturing 
industries  were  paralyzed,  we  had  another  panic  on  our  hands, 
and  the  struggle  against  the  malign  influences  of  free  trade 
went  on  until  McKinley  was  elected. 

With  regard  to  General  Harrison  himself,  he  is  a  man  of 
unique  personality  and  fine  culture,  a  profound  lawyer  and  an  elo- 
quent orator ;  yet  he  was  never  known  to  parade  any  of  these  gifts 
or  attainments.  His  modesty  in  this  respect  has  seldom  been 
excelled  by  any  one  in  an  eminent  office.  His  speeches  are  mar- 
velous for  their  variety ;  wherein  they  differ  from  Bryan's,  which 
always  harp  on  the  same  theme.  But  General  Harrison  is  un- 
excelled in  versatility  even  by  Horace  Greeley.  That  Western 
trip  of  thirty  days  in  the  spring  of  1891  has  no  parallel  in  the 
annals  of  electioneering  speeches  —  which  they  virtually  were. 

General  Harrison  traveled,  just  as  Mr.  Bryan  did,  throughout 
the  whole  West  and  South ;  he  covered  more  ground  than  Mr. 
Bryan  in  the  same  time,  was  equally  ubiquitous,  and  made  about 
as  many  speeches ;  but  here  the  comparison  ends. 

The  speeches  were  of  a  different  kind.  In  every  separate 
State  General  Harrison  displayed  an  intimate  knowledge  of 
that  State  and  its  people,  with  their  habits  and  customs  from  the 
earliest  times,  as  if  he  had  been  born  there  and  lived  among 
them  all  his  life.  Not  only  in  variety,  but  even  in  mere  number 
of  addresses,  Harrison  leaves  the  free-silver  orator  far  in  the 
distance.  He  made  nine  speeches  in  one  day,  for  instance,  in 


100         THE   WALL   STREET   POINT   OF   VIEW. 

San  Francisco  without  repeating  himself,  and  one  of  them  was 
a  banquet  oration,  regarded  by  both  Republican  and  Demo- 
cratic papers  as  one  of  the  greatest  oratorical  efforts  ever  heard 
in  that  city. 

One  very  conspicuous  point  in  General  Harrison's  visiting 
trip  was  the  sudden  and  strong  attachment  of  the  people  to 
him,  which  thus  displayed  the  powerful  magnetism  of  the  man. 
He  had  a  rare  felicity  in  complimenting  the  people  on  the  good 
points  exhibited  in  their  State,  and  of  making  them  feel  satisfied 
with  their  lot  and  location.  A  good  illustration  is  from  a  little 
speech  in  Ashland,  Oregon,  as  follows  :  — 

"  My  friends,  you  have  a  most  beautiful  State,  capable  of  pro- 
moting the  comfort  of  your  citizens  in  a  very  high  degree,  and, 
although  already  occupying  a  high  place  in  the  galaxy  of  States,  it 
will,  I  am  sure,  take  a  much  higher  one.  It  is  pleasant  to  see  how 
the  American  spirit  prevails  among  all  your  people,  love  for  the  flag 
and  its  constitution,  those  settled  and  permanent  things  that  live, 
whether  men  go  or  come.  They  come  to  us  from  our  fathers  and 
pass  down  to  our  children. 

"You  are  blessed  with  a  genial  climate  and  most  productive  soil. 
I  see  you  have  in  this  northern  part  of  California  what  I  have  seen 
elsewhere  —  a  well-ordered  community,  with  churches  and  school- 
houses,  which  indicate  you  are  not  giving  all  your  thoughts  to 
material  things,  but  are  thinking  of  those  things  that  qualify  the 
soul  for  hereafter.  We  have  been  treated  to  another  surprise  this 
morning  in  the  first  shower  we  have  seen  in  California.  I  con- 
gratulate you  that  it  rains  here.  May  all  the  blessings  fall  upon 
you  like  this  gentle  rain." 

The  chief  qualities  that  characterize  this  speech  are  simplic- 
ity, terseness,  directness,  and  a  thorough  appreciation  of  his 
audience.  General  Harrison  has  been  charged  with  being  cold, 
but  the  sympathetic  tone  in  which  he  addressed  the  people  of 
Ashland  would  seem  to  disprove  the  imputation.  He  may  be 
cold  toward  those  who  would  be  incapable  of  appreciating  his 
warmth,  and  between  whom  and  himself  there  is  no  natural 
sympathy. 

Let  us  now  regard  General  Harrison  as  a  politician  and  a 


THE   HARRISON   ADMINISTRATION.  IOI 

statesman.  He  is  a  man  of  remarkable  candor  and  courage. 
This  was  displayed  very  prominently  in  his  letter  of  acceptance, 
in  which  he  refused  to  follow  slavishly  the  platform  of  the  party, 
but  boldly  expressed  his  own  independent  opinions.  Candi- 
dates for  the  highest  office  in  the  land,  or,  indeed,  for  any  office, 
are  usually  afraid  to  venture  on  such  a  course  of  action ;  but  in 
the  case  of  Harrison  it  was  made  clear  that  he  was  a  thorough 
politician  as  well  as  a  far-seeing  statesman.  It  might  be  said  of 
him,  in  fact,  as  a  great  Englishman,  Viscount  Bolingbroke  (St. 
John),  said  of  Dean  Swift;  "Turn  him  to  any  course  of  policy, 
the  Gordian  knot  of  it  he  will  unloose,  familiar  as  his  garter." 
To  show  the  depth  of  President  Harrison's  political  insight, 
there  probably  could  be  no  better  testimony  than  that  of  James 
G.  Elaine.  Commenting  on  the  political  sagacity  in  General 
Harrison's  letter  of  acceptance,  the  man  of  Maine  said  :  — 

"  The  position  of  the  candidate,  as  defined  by  himself,  is  of  far 
more  weight  with  the  voters,  and  the  letter  of  acceptance  has  come 
to  be  the  legitimate  creed  of  the  party.  Notoriously,  little  heed  is 
given  to  an  exposition  of  principles  by  the  committee  on  resolutions, 
and  less  heed  is  given  to  resolutions  when  submitted  to  the  con- 
vention at  large.  This  springs  naturally  from  the  fact  that  great 
haste  characterizes  the  preparation  of  the  platform,  and  if  one  man 
of  the  committee  has  any  political  hobby  that  he  wishes  to  incorpo- 
rate, he  has  little  trouble,  from  the  general  inattention  of  the 
members,  in  compassing  his  end.  Conventions  often  embody  issues 
which  are  impracticable,  and  occasionally  that  are  mischievous  and 
embarrassing." 

General  Harrison  cleverly  evaded  the  hobbies  of  the  conven- 
tion, while  he  paid  due  respect  to  the  main  features  of  the  plat- 
form. This  was  respectful  to  the  convention.  Mr.  Cleveland,  on 
the  contrary,  in  his  acceptance  took  no  chances.  According  to 
Mr.  Elaine  he  made  the  platform  himself,  quite  ignoring  the 
convention.  It  must  be  remembered  also  that  Mr.  Cleveland 
was  consistent  in  the  maintenance  of  this  independent  policy 
to  the  end  of  his  administration. 

The  policy  of  President  Harrison  toward  the  South  was  of 
the  most  conciliatory  character,  and  in  no  instance,  perhaps, 


102         THE   WALL   STREET   POINT  OF  VIEW. 

did  his  wisdom  and  prudence  shine  more  brilliantly.  His  sug- 
gestion to  Congress  that  provision  be  made  "  for  the  appoint- 
ment of  a  non-partisan  commission  to  consider  the  subject  of 
apportionments  and  elections  in  their  relation  to  the  choice  of 
federal  officers  "  was  a  master-stroke  of  policy,  especially  at  the 
time  when  Democratic  politicians  were  attempting  to  inflame  all 
the  hostile  passions  of  their  party  against  the  Federal  Election 
Bill.  President  Harrison's  wisdom  was  further  shown  in  this 
matter  by  urging  upon  Congress  the  passage  of  a  law  which 
would  give  to  the  Supreme  Court  the  appointment  of  the  non- 
partisan  commission.  This  took  the  wind  out  of  the  Demo- 
cratic sails  and  bereft  several  prominent  journals  of  their  best 
material  for  criticism,  as  well  as  many  politicians  of  a  prolific 
subject  for  discussion. 

Any  review  of  that  administration  would  be  incomplete  with- 
out a  reference  to  those  significant  commercial  projects  con- 
templated by  President  Harrison  and  his  brilliant  minister, 
Secretary  Elaine.  I  refer  to  the  plan  of  reciprocity  treaties 
wherever  they  could  be  profitably  negotiated.  Before  the  end 
of  his  administration  the  enterprise  was  well  under  way ;  it  had 
worked  admirably  and  profitably  in  Cuba  and  in  the  Windward 
and  Leeward  Islands ;  it  had  begun  to  manifest  its  good  influ- 
ences in  South  and  Central  America,  and  was  materially  lessen- 
ing the  balance  of  trade  against  us  in  those  countries.  But  the 
succeeding  Democratic  administration  did  not  see  the  incalcu- 
lable benefits  to  be  derived  from  this  great  movement  in  trade 
and  commerce,  partly  through  inappreciation  of  its  commercial 
importance,  and  partly,  perhaps,  through  partisan  prejudices 
because  Secretary  Elaine  and  President  Harrison  were  its  origi- 
nal projectors.  It  is  sad  to  think  that  partisanship  should  block 
the  way  of  progress  in  some  of  the  most  benignant  and  patri- 
otic enterprises ;  but  perhaps  such  things  must  be  while  two 
political  parties  of  generally  opposite  views  seem  necessary  to 
carry  on  the  government  and  to  maintain  those  checks  and  bal- 
ances indispensable  to  its  stability. 


CHAPTER   XV. 

MR.  CLEVELAND'S  SECOND  ADMINISTRATION. 

How  Mr.  Cleveland  acquired  the  character  of  an  independent  candidate. 
—  Success  of  his  fiscal  policy,  especially  regarding  the  surplus  revenue 
and  the  depository  banks.  —  Making  himself  "  solid  "  with  bankers  and 
financiers.  —  How  it  was  that  he  was  beaten  by  Harrison  in  1888,  but 
vanquished  him  in  1892.  — How  he  lost  his  popularity  by  the  irrepara- 
ble errors  of  the  two  object  lessons.  —  Remarks  on  his  sound  money 
views  and  his  indomitable  perseverance.  —  Utterly  failed  to  understand 
the  tariff  question. 

IF  Mr.  Cleveland  had  prudently  followed  up  during  his  second 
term  a  few  of  the  strokes  of  wise  policy  and,  in  several 
instances,  the  good  guiding  and  prudent  management  which 
characterized  his  first  administration,  he  might  have  gone  down 
to  posterity  in  the  odor  of  political  sanctity ;  but  his  two  famous 
object  lessons  were  two  unfortunate  departures. 

These  two  object  lessons  were  Mr.  Cleveland's  personal 
interference  with  the  repeal  of  the  purchasing  clause  of  the 
Sherman  Law  of  1890  relating  to  silver  coinage,  and  the  Wil- 
son Tariff  Bill. 

In  order  to  understand  fully  the  nature  of  Mr.  Cleveland's 
second  administration,  it  is  necessary  to  recapitulate  a  few 
important  points  intimately  connected  with  his  first. 

After  the  nomination  for  his  first  term,  though  a  Democratic 
nominee,  he  owed  his  election  chiefly  to  those  deserters  from  the 
Republican  party  who  were  designated  "  Mugwumps."  His 
peculiar  relationship  to  these  independent  voters  made  him  in 
reality  an  independent  President.  He  therefore  acted  upon 
the  principle  that  he  was  the  people's  President  without  regard 
to  party  lines,  and  this  idea  seemed  to  inspire  him  with  a  feel- 
ing that,  like  Napoleon,  he  was  a  man  of  destiny. 

After  Mr.  Cleveland  was  inaugurated  for  the  first  term  he 

103 


104         THE   WALL   STREET   POINT   OF  VIEW. 

found  an  overflowing  Treasury,  with  a  consequent  dearth  of 
money  outside.  Owing  to  the  contraction  in  circulation  caused 
by  this  surplus,  there  were  ominous  forebodings  of  panic  in  the 
air.  Mr.  Cleveland  first  did  all  he  could,  as  noticed  elsewhere, 
in  the  way  of  buying  such  bonds  as  the  government  under  exist- 
ing legislation  had  authority  to  purchase,  but  all  to  very  little 
purpose.  He  then  wisely  resorted  to  the  depository  banks, 
putting  the  surplus  there,  and  the  strain  was  soon  relieved.  He 
even  had  the  number  of  these  banks  increased  for  the  purpose 
of  putting  the  money  into  circulation. 

The  situation  was  more  alarming  than  many  people  think, 
for  dangers  of  this  kind  cannot  be  thoroughly  estimated  until 
after  the  danger  is  past.  Considerable  money  was  required  at 
a  certain  time,  then  not  far  distant,  to  move  the  crops,  which 
that  year  gave  an  ample  yield ;  while  money  in  Wall  Street  and 
throughout  the  country  was  becoming  very  stringent,  and  very 
hard  to  obtain.  Hence  is  seen  the  financial  wisdom  mani- 
fested by  Mr.  Cleveland  in  augmenting  the  number  of  the 
depository  banks.  He  issued  an  order  through  his  able  Sec- 
retary of  the  Treasury,  Daniel  Manning,  to  the  effect  that  all 
money  due  the  government  thereafter  should  be  paid  into  these 
banks,  and  kept  in  circulation,  instead  of  having  it  remain 
uselessly  in  the  government  vaults;  an  action  which  had  an 
immediate  and  soothing  effect  upon  public  feeling,  restored 
confidence  in  business  circles,  and  enabled  the  crop  movement 
and  other  enterprises  to  go  on  without  interruption. 

The  banks,  meanwhile,  accumulated  $60,000,000  in  deposits 
to  the  credit  of  the  government,  and  had  this  money  gone  into 
the  Treasury  instead  of  the  depository  banks,  we  should  prob- 
ably have  witnessed  in  Wall  Street  and  throughout  the  country 
one  of  the  worst  panics  on  record.  Mr.  Cleveland  and  his 
Secretary  of  the  Treasury  gained  great  praise  for  the  masterly 
manner  in  which  the  finances  were  managed  at  that  critical 
period,  and  the  credit  is  all  the  more  due  to  them  both,  inas- 
much as  it  was  a  new  experiment  in  government  financiering 
on  so  large  a  scale,  and  the  necessity  was  sprung  upon  these 
two  officials  quite  unexpectedly. 


CLEVELAND'S   SECOND   ADMINISTRATION.       105 

The  popularity  which  Mr.  Cleveland  suddenly  and  unex- 
pectedly acquired  by  this  able  operation  put  him  and  his 
independent  party  away  ahead,  and  made  him,  if  possible,  still 
more  independent  of  the  Democrats.  The  confidence  on  the 
part  of  the  public  had  developed  considerably  beyond  even 
what  it  had  been  at  the  time  of  his  election,  and  everybody 
seemed  to  feel  that  all  matters  financial,  internal  and  inter- 
national, were  safe  in  his  hands.  In  fact  he  had  become 
dangerously  popular,  if  he  had  been  a  man  imbued  with  one- 
man  power  ambition. 

This  public  feeling  continued  unabated  and  even  waxed 
warmer  quite  up  to  the  time  of  his  second  inauguration,  and 
it  was  not  therefore  to  be  wondered  at  that  a  vast  number  of 
the  people  of  the  country  wanted  him  again  for  President. 
Practically  he  was  forced  upon  the  convention  which  his  man- 
agers carried  by  a  coup,  and  secured  his  nomination  in  the  face 
of-  all  the  opposition  that  an  antagonistic  party  machine  could 
concentrate  against  him.  It  was  demonstrated  to  his  own  satis- 
faction and  that  of  the  public  that  the  people  were  with  him  at 
that  convention,  and  in  such  victorious  circumstances,  against 
such  odds  in  the  convention,  why  should  he  not  have  continued 
to  feel  that  he  was  backed  by  the  people,  and  not  by  politi- 
cians ?  Can  it  be  matter  of  surprise  that  he  fought  the  politi- 
cians all  through  his  second  term  of  office,  neither  asking  nor 
giving  quarter?  He  thus  succeeded  in  making  enemies  of 
nearly  all  the  powerful  leaders  of  the  Democratic  party.  "  \Ve 
love  him  for  the  enemies  he  has  made,"  said  one  enthusiastic 
adherent ;  but  harmony  between  him  and  those  prominent  lead- 
ers who  in  a  well-regulated  administration  should  uphold  the 
hands  of  the  President  was  out  of  the  question.  On  the  con- 
trary, the  antipathy  was  mutual  and  bitter,  and  discord  was  the 
natural  result.  The  administration  was  divided  against  itself, 
and  it  could  not  stand. 

It  was  mainly  due  to  these  unfortunate  relations  between  the 
Executive  and  the  Democratic  party  that  it  became  possible  at 
the  Chicago  convention  of  1896  for  Altgeld,  Tillman,  William 
Jennings  Bryan,  and  a  few  others  of  that  ilk,  to  capture  the 


106         THE  WALL   STREET   POINT  OF   VIEW. 

convention  and  steal  the  machine  of  the  party.  The  dissen- 
sions between  the  Democratic  leaders  and  the  Executive 
enabled  free-silver  cranks,  anarchists,  socialists,  and  others 
belonging  to  the  revolutionary  fraternity,  to  take  advantage  of 
the  situation.  Moreover,  quite  a  number  of  sound-money  men 
became  silverites  at  this  convention,  not  from  any  conviction 
that  the  theory  was  correct,  but  out  of  sheer  antipathy  to  Mr. 
Cleveland.  According  to  the  adage,  some  of  them  were  ready 
to  cut  off  their  noses  to  spite  their  faces.  The  opinion  seemed 
to  prevail,  at  least  in  inside  circles,  that  the  silver  plank  was 
inserted  in  the  Democratic  platform  chiefly  for  the  purpose  of 
heading  off  the  designs  of  Mr.  Cleveland  for  a  third  term,  as  he 
was  famous  for  springing  surprises. 

In  reviewing  Mr.  Cleveland's  administration,  it  must  be 
borne  in  mind  that  the  prime  cause  of  commercial  misfortune 
lay  in  the  reversal  of  national  policy.  The  country  was  thriv- 
ing under  institutions  that  had  been  built  up  as  the  result  of 
the  politico-economic  experience  of  thirty-two  years'  rule  of 
the  party  previously  in  power.  The  inevitable  result  of  a 
reversal  of  governmental  policy  is  in  the  upheaval  of  business, 
which  must  needs  be  entirely  readjusted  to  new  methods  and 
conditions,  with,  in  many  instances,  disastrous  consequences. 

Mr.  Cleveland  obtained  an  immense  vote  in  his  third  cam- 
paign, in  1892,  from  those  who  remembered  his  energetic 
struggle  to  reduce  the  surplus,  and  his  able  management  in 
preserving  the  country  from  panic  during  his  first  administra- 
tion. They  naturally  favored  him  for  another  term,  being 
assured  that  the  same  shrewd  and  sagacious  policy  in  finance 
would  direct  and  inspire  all  his  efforts  and  actions  in  that 
department  of  the  government.  He  retained  this  popularity 
and  his  hold  on  the  people,  notwithstanding  his  temporary 
defeat  in  1888  and  the  Harrison  interim  ;  and  he  came  up,  after 
a  long  rest,  in  1892,  potent  and  debonair,  with  the  same  old 
clientele  considerably  augmented,  as  the  darling  of  the  people, 
and  as  independent  as  ever  of  the  machine  Democracy.  In 
fact,  he  had  kicked  the  machine  out  of  his  way  again,  just  as 
he  had  in  1884  defied  John  Kelly  and  Tammany  Hall. 


CLEVELAND'S   SECOND  ADMINISTRATION.       107 

It  may  seem  somewhat  strange  that  Mr.  Cleveland  carried 
his  popularity  over  those  four  years  despite  all  the  allowance 
that  must  necessarily  be  made  for  secret  electioneering  in  the 
meantime ;  and  the  most  puzzling  part  of  it  appears  to  be  that 
he  could  not  beat  General  Harrison  in  1888,  but  vanquished 
him  by  the  large  majority  of  132  in  the  electoral  college  in 
1892.  In  1888  General  Harrison  had  a  majority  over  Mr. 
Cleveland  of  only  65  in  the  electoral  college.  It  will  be  re- 
membered that  he  severely  denounced  a  tariff  reform  of 
greater  protection  to  American  industries  during  his  first  term, 
and  especially  in  his  message  of  1887.  This  was  undoubtedly 
displeasing  both  to  wage  earners  and  their  employers.  And 
it  was  this  revulsion  of  feeling  against  Mr.  Cleveland's  lan- 
guage toward  protectionists  and  his  strong  free-trade  pro- 
clivities that  worked  against  him  in  his  unsuccessful  campaign 
against  General  Harrison. 

How  President  Harrison  in  his  turn  lost  his  hold  and  failed 
to  succeed  for  a  second  term  is  a  long  story,  not  in  place 
here.  Briefly,  it  was  an  inauspicious  time,  and  a  large  number 
of  voters  who  knew  little  or  nothing  about  finance  were  easily 
persuaded  that  the  President  and  Congressman  McKinley  were 
largely  to  blame  for  the  Baring  panic.  This  was  one  element 
which  contributed  to  the  defeat  of  General  Harrison.  "Now," 
said  the  independent  followers  of  Mr.  Cleveland  and  the  stump 
spellbinders,  "  didn't  we  tell  you  what  protection  and  the 
McKinley  Bill  would  bring  upon  the  country  ?  "  This  seemed 
plausible  under  the  circumstances,  but  it  was  only  part  of  the 
story.  There  was  considerable  solidity  behind  Cleveland.  The 
wealthy  financiers,  bankers,  and  others  remembered  his  wise 
policy  in  establishing  the  additional  depository  banks  and  filling 
them  with  government  money,  and  they  had  faith  in  him  for 
this  reason,  a  circumstance  which  alone  brought  a  large 
contingent  of  the  money  power  to  his  back,  and  contri- 
butions to  the  campaign  fund  were  on  an  unusually  liberal 
scale.  Added  to  these  facts,  Mr.  Cleveland  was  sound  on 
the  money  question,  an  uncompromising  gold  monometallist ; 
and,  as  he  was  bold  and  firm  even  to  the  verge  of  obstinacy,  he 


108          THE  WALL   STREET   POINT   OF   VIEW. 

was  properly  considered  an  excellent  choice  to  withstand  the 
hosts  of  free-silverites  whose  clans  were  then  gathering  with 
hostile  intent  and  preparing  all  over  the  West  for  a  fierce  fight. 

Another  thing  which  favored  Mr.  Cleveland  was  the  patent 
fact  that  President  Harrison  and  his  managers  did  not  make  as 
much  out  of  their  opportunities  as  they  might  have  done.  If 
Mr.  Harrison  had  taken  up  the  question  of  Civil  Service  Reform, 
for  example,  in  which  the  first  Cleveland  administration  failed, 
and  made  strenuous  efforts  to  carry  out  its  legitimate  purposes, 
he  might  have  been  more  popular  for  the  second  term  than 
Mr.  Cleveland.  But  where  President  Harrison  made  his 
greatest  mistake  was  in  his  manifestation  of  jealousy  against 
Mr.  Elaine.  If  he  had  magnanimously  left  the  field  clear  for 
Mr.  Elaine's  candidacy,  that  most  popular  man  in  the  Republi- 
can party,  as  well  as  the  favorite  of  many  of  the  Democrats, 
would  probably  have  defeated  Mr.  Cleveland.  That  foolish, 
alliterative  phrase  of  Burchard's,  "  Rum,  Romanism,  and  Rebel- 
lion," which  materially  contributed  to  Elaine's  defeat  in  1884, 
had  no  weight  with  voters  on  second  thoughts  and  mature  re- 
flection. Mr.  Elaine  in  1892  was  probably,  after  all,  the  most 
popular  man  in  the  country,  both  with  the  industrial  element 
and  with  the  manufacturers,  who  constitute  the  backbone  of 
the  nation,  and  his  plans  for  protection  and  reciprocity  might 
have  brought  permanent  prosperity  to  the  United  States.  It  is 
my  opinion  that  he  would  have  made  a  successful  run,  despite 
the  popularity  of  his  vigorous  opponent. 

This,  however,  was  not  to  be,  and  the  people,  reflecting  on 
the  circumstances  above  narrated,  naturally  favored  Grover 
Cleveland  for  a  second  term,  believing  that  the  same  desire  to 
guard  the  welfare  of  the  country  and  promote  its  prosperity 
which  marked  his  first  term  would  still  govern  him,  and  that 
the  same  line  of  policy  as  had  been  exhibited  in  his  best  acts 
during  the  first  term  would  actuate  all  his  movements  during 
the  second.  Minor  delinquencies,  such  as  Civil  Service  neglect, 
were  forgotten  or  forgiven.  In  fact  they  faded  out  in  the  light 
ot  the  superiority  which  he  had  manifested  as  a  financier. 

The  surprise  was  astounding,  therefore,  when  Mr.  Cleveland 


CLEVELAND'S    SECOND   ADMINISTRATION.       IOQ 

sprang  upon  the  people  the  object  lesson  which  brought  about 
panic  Number  One.  He  acted  on  the  principle  that  the  best 
way  to  get  a  bad  law  repealed  is  to  enforce  its  execution.  Mr. 
Cleveland's  strange  and  incomprehensible  excuse  for  teaching 
this  object  lesson  was  that  suffering  among  the  people  was  abso- 
lutely necessary  to  cause  them  to  bring  sufficient  pressure  upon 
their  representatives  in  Congress  to  impel  the  latter  to  vote  for 
the  repeal  of  the  purchasing  clause  of  the  Sherman  Silver 
Law  of  1890,  and  this  clause  was  repealed  in  November,  1893, 
during  the  extra  session  that  had  been  called  for  that  purpose. 
To  my  mind,  the  chief  error  regarding  this  repeal  was  the 
inopportune  time  at  which  it  was  forced.  The  people  were 
exceedingly  sensitive  about  everything  relating  to  the  financial 
situation,  and  they  thought  all  legislative  interference  with  the 
currency  foreboded  panic.  It  is  a  fact  well  known  to  those 
who  have  been  close  observers  of  the  history  of  finance  that 
when  any  considerable  number  of  people  hold  such  views,  they 
become  virtual  panic-makers.  So  it  was  in  1893.  Mr.  Cleve- 
land should  have  dealt  with  the  Sherman  Act  immediately  after 
his  inauguration.  He  deferred  his  action  too  long.  The  peo- 
ple had  become  apprehensive  at  the  remembrance  of  the  recent 
Baring  panic,  from  the  effect  of  which  they  were  just  beginning 
to  recover.  The  year  1892,  moreover,  had  been  in  a  very  large 
measure  prosperous,  for  the  reason  that  it  was  the  first  year 
since  the  McKinley  Bill  had  been  passed  that  the  law  had  a 
chance  of  exhibiting  its  good  effects  above  disturbing  influ- 
ences. The  time  therefore,  I  say,  was  very  inopportune  for 
the  President  to  recommend  legislation  that,  however  good  or 
innocent  in  itself,  was  likely  to  make  people  apprehensive.  If 
all  our  people  were  thoughtful  and  reflective  and  could  under- 
stand the  nature  of  a  law,  the  case  would  have  been  very  differ- 
ent ;  but  they  are  not  so.  While  the  act  in  question  repealed 
the  purchasing  clause,  it  recommended  to  the  government  to 
make  every  effort  to  establish  such  a  system  of  bimetallism  as 
would  maintain  the  equal  value  of  every  dollar  coined  or  issued 
by  the  United  States,  in  the  markets,  and  in  the  payment  of 
debts. 


110         THE  WALL   STREET   POINT   OF   VIEW. 

I  append  herewith  the  entire  section,  verbatim,  by  which  the 
idea  of  the  intent,  spirit,  and  purpose  of  the  law  can  be  more 
fully  understood :  — 

ACT  OF  NOVEMBER  i,  1893.  AN  ACT  TO  REPEAL  A  PART  OF 
AN  ACT  APPROVED  JULY  14,  1890,  ENTITLED  "AN  ACT 
DIRECTING  THE  PURCHASE  OF  SILVER  BULLION  AND  THE 
ISSUE  OF  TREASURY  NOTES  THEREON,  AND  FOR  OTHER  PUR- 
POSES. 

"Be  it  enacted,  etc.,  That  so  much  of  the  act  approved  July  14, 
1890,  entitled  'An  act  directing  the  purchase  of  silver  bullion  and 
issue  of  Treasury  notes  thereon,  and  for  other  purposes,'  that  directs 
the  Secretary  of  the  Treasury  to  purchase  from  time  to  time  silver 
bullion  to  the  aggregate  amount  of  4,500,000  ounces,  or  so  much 
thereof  as  may  be  offered  in  each  month  at  the  market  price  thereof, 
not  exceeding  one  dollar  for  371^  grains  of  pure  silver,  and  to 
issue  in  payment  for  such  purchases  Treasury  notes  of  the  United 
States,  be,  and  the  same  is,  hereby  repealed.  And  it  is  hereby 
declared  to  be  the  policy  of  the  United  States  to  continue  the  use 
of  both  gold  and  silver  as  standard  money,  and  to  coin  both  gold 
and  silver  into  money  of  equal  intrinsic  and  unchangeable  value, 
such  equality  to  be  secured  through  international  agreement,  or  by 
such  safeguards  of  legislation  as  will  insure  the  maintenance  of  the 
parity  in  value  of  the  coins  of  the  two  metals,  and  the  equal  power 
of  every  dollar  at  all  times  in  the  markets  and  in  the  payment  of 
debts.  And  it  is  hereby  further  declared  that  the  effort  of  the  gov- 
ernment should  be  steadily  directed  to  the  establishment  of  such  a 
safe  system  of  bimetallism  as  will  maintain  at  all  times  the  equal 
power  of  every  dollar  coined  or  issued  by  the  United  States,  in  the 
markets  and  in  the  payment  of  debts." 

This  "equal  power"  of  every  dollar  would  be  lost  if  owners 
of  silver  mines  could  have  their  wealth  multiplied  by  two  by 
simple  fiat  of  the  National  Legislature,  and  no  kind  of  class 
legislation  could  be  worse,  as  it  would  make  gifts  of  millions 
to  monopolists  and  silver  trusts  by  the  votes  of  the  poor  people 
who  are  loudest  against  trusts  and  monopolies.  The  policy  of 
the  free-silverites  would  destroy  all  chances  of  bimetallism,  for 
which  the  act  invokes  the  aid  of  foreign  governments. 

After  the  repeal  of  the  purchasing  clause  there  was  a  run  on 


CLEVELAND'S    SECOND   ADMINISTRATION.       in 

the  Treasury  to  exchange  greenbacks  for  gold,  and  the  public 
seemed  to  be  seized  with  a  spasmodic  feeling  that  nothing 
in  the  shape  of  money  was  reliable  except  the  yellow 
metal. 

Object  lesson  Number  Two  consisted  of  the  agitation  over 
the  Wilson  Bill,  and  its  final  passage  in  such  a  deformed  con- 
dition, however,  that  its  paternal  relative  was  totally  unable  to 
recognize  his  own  offspring.  Mr.  Cleveland  obstinately  refused 
to  be  the  godfather  of  the  baby  which  had  been  so  maltreated 
by  a  wicked  and  prejudiced  Senate. 

The  bill  had  passed  the  House  with  easy  success.  The  baby 
was  a  smiling  cherub  in  the  eyes  of  a  large  majority  of  Congress, 
and  never  uttered  a  squall  until  it  reached  the  upper  House, 
and  the  unfeeling  senators  began  to  pinch  the  poor  thing. 
The  silverites,  and  others  in  that  honorable  body,  had  the 
audacity  to  make  640  amendments  to  the  bill,  until  it  was 
like  the  Irishman's  gun,  regarding  which  the  gunsmith  said, 
when  he  was  asked  if  he  could  mend  it,  that  it  wanted  a  new 
lock,  stock,  and  barrel. 

No  wonder  that  Mr.  Cleveland  exclaimed,  when  the  ugly 
changeling  was  presented  to  him,  "  It  is  an  act  of  perfidy  and 
dishonor."  We  can  only  imagine  what  Professor  Wilson's 
feelings  must  have  been  when  he  beheld  the  metamorphosed 
production  of  his  fine  and  profound  intellect. 

To  say  that  the  House  was  thunderstruck  on  the  return  of 
the  bill,  when  they  beheld  its  curious  metempsychosis,  would  be 
putting  it  mildly.  They  soon  discovered,  however,  it  was  either 
"  that  or  nothin',"  according  to  the  Senate's 'mandate,  and  they 
mournfully  accepted  it. 

It  is  almost  needless  to  say  that  Mr.  Cleveland  did  not  sign 
this  deformity  and  he  was  too  indignant  even  to  veto  it.  He 
let  it  go  by  the  constitutional  ten  days'  default,  and  it  became 
a  law  in  all  the  horrors  of  its  "  perfidiousness."  No  wonder, 
therefore,  that  Messrs.  Cleveland  and  Carlisle  were  "short" 
on  government  expenses  and  "long"  on  bonds  to  procure  gold. 
If  the  President  had  exercised  his  veto  power,  it  would  have 
been  a  good  thing  for  the  country,  as  in  that  event  the  McKin- 


112         THE  WALL   STREET   POINT   OF   VIEW. 

ley  Law  would  have  continued  in  existence,  and  we  probably 
would  have  had  better  times ;  but  if  better  times  had  not 
ensued,  the  country's  condition  would  have  given  the  Demo- 
crats an  excellent  opportunity  to  attribute  their  luck  to  the 
McKinley  Bill,  instead  of  the  Republicans  being  able,  as  things 
turned  out,  to  set  down  all  business  troubles  and  calamities  to 
the  Wilson  Bill.  Mr.  Cleveland's  conduct  in  regard  to  the  bill, 
and  the  weak  front  shown  by  the  House  in  swallowing  it  with 
the  absurd  amendments,  will  afford,  it  seems  to  me,  a  barrier 
for  a  long  period  against  making  free  trade  an  issue  in  a  presi- 
dential campaign. 

Probably  a  new  generation  will  have  appeared  on  the  scene, 
with  little  or  no  knowledge  of,  or  interest  in,  the  disasters 
of  the  last  four  Democratic  years,  before  there  can  be  any  pos- 
sible political  recovery  for  that  party,  or  before  free-trade  doc- 
trines, as  against  protection  for  United  States  industries,  can 
have  any  favorable  support  from  the  people. 

In  view  of  the  facts  herein  stated  and  the  references  to  the 
tariff  bills,  it  is  fitting  to  quote  some  official  figures  regarding 
the  outcome  of  the  two  bills. 

Total  receipts  under  McKinley  Law, 

October,  1890-1892 #759^56,825 

Total  expenditures  under  McKinley  Law, 

October,  1890-1892 731,211,184 

Surplus ^28,245,641 

Total  receipts  under  Wilson  Law, 

September,  1894,  to  December,  1895  ....  £373,790,648 
Total  expenditures  under  Wilson  Law, 

September,  1894,  to  December,  1895       ....      444,290,692 

Deficiency £70,500,044 

The  total  deficiency  in  meeting  government  expenses  up 
to  November,  1895,  exceeded  £130,000,000. 

If  the  Wilson  Bill  had  passed  the  Senate  as  it  left  the  House 
of  Representatives,  the  deficiency  in  the  revenue  would  have 
been  still  larger  than  it  was  in  December,  1895  ;  so  the  Admin- 


CLEVELAND'S   SECOND   ADMINISTRATION.       113 

istiation  should  have  been  glad  that  the  Senate  disfigured  the 
bill.  The  Wilson  Law,  moreover,  caused  the  first  deficiency 
that  had  occurred  in  the  revenue  since  the  close  of  the  Civil 
War.  Every  year,  from  that  time  up  to  1893,  there  had 
been  a  surplus  and  a  consequent  reduction  of  the  national 
debt. 


CHAPTER   XVI. 

EX-PRESIDENT  CLEVELAND  PERSONALLY  CONSIDERED. 

The  theory  of  his  potent  personality  and  an  attempt  to  reveal  the  secret 
of  his  success  through  this  mysterious  power  and  other  potentialities.  — 
Striking  a  balance  between  his  praiseworthy  acts  and  some  of  his  mis- 
takes. —  How  he  is  likely  to  be  rated  by  the  future  historian  and  biog- 
rapher. —  His  name  stamped  indelibly  on  the  politics  of  his  own  times. 
—  His  unflinching  advocacy  of  sound  money.  —  He  drew  all  shades  of 
politics  after  him  and  was  independent  of  party.  —  Why  he  drew  so 
many  heterogeneous  elements.  —  Comparison  with  Macaulay's  Machia- 
velli.  —  His  prompt  and  popular  action  in  suppressing  the  Chicago  riots 
and  causing  the  overthrow  of  Eugene  V.  Debs.  —  His  advice  to  the 
Democratic  party. 

IF  anybody  should  happen  to  draw  the  inference,  from  the 
strictures  I  have  made  elsewhere  on  the  errors  and  short- 
comings of  ex-President  Cleveland,  that  he  was  not  possessed 
of  several  elements  of  greatness,  it  would  be  a  grave  error  in 
judgment  on  the  part  of  the  reader. 

Mr.  Cleveland  has  shown  himself  to  be  a  great  and  remarka- 
ble man  in  many  respects,  and  this  will  in  all  probability  be  the 
estimate  of  posterity. 

My  chief  reason  for  this  belief  is  that  the  man's  potent  per- 
sonality in  a  few  things  that  were  highly  important  has  stamped 
itself  indelibly  on  the  politics  of  his  own  times.  For  instance, 
he  stood  up  for  sound  money,  and  was  one  of  the  strongest 
advocates  of  the  cause  against  the  clamor  for  free-silver  coin- 
age, which  at  one  time  came  near  carrying  with  it  a  majority. 
Of  course  the  victory  would  have  been  only  temporary,  if  such 
general  dementia  had  seized  the  people  at  large,  because  the 
sober  second  thought  of  the  thinking  minority  would  have 
triumphed  eventually  after  the  country  had  perhaps  passed 
through  the  ordeal  of  a  panic  worse  than  all  former  panics  con- 

114 


EX-PRESIDENT   CLEVELAND   CONSIDERED.      115 

densed  into  one.  From  a  calamity  of  this  character  Mr.  Cleve- 
land was  one  of  the  most  potent  agencies  in  saving  us.  He 
was  unflinching  in  his  courage  in  the  maintenance  of  the  gold 
standard,  and  in  all  probability  his  influence  and  his  powerful 
attacks  on  the  free-silver  heresy  made  almost  as  many  votes 
for  McKinley  as  Mark  Hanna  did ;  and  this  in  spite  of  Mr. 
Cleveland's  deep-seated  aversion  to  Mr.  McKinley's  pet  theory 
of  protection  for  our  industries. 

Cleveland  has  been  very  popular  at  intervals  during  both 
terms  of  his  administration,  and  the  secret  of  his  popularity 
has  been  rather  a  mystery  to  both  friends  and  foes. 

The  supreme  test  of  the  popularity  of  a  President  and  an 
administration  is  whether  during  the  greater  part  of  the  period 
of  power  the  country  has  been  prosperous.  Beyond  this  test 
the  public  are  no  more  inclined  to  listen  to  excuses  or  apolo- 
gies than  they  are  in  the  case  of  a  general  who  has  been 
vanquished  in  a  series  of  battles  by  the  enemy.  That  charity 
which  is  said  to  cover  a  multitude  of  sins  is  rarely,  if  ever, 
exercised  in  instances  like  these. 

When  Mr.  Cleveland  took  possession  of  the  White  House, 
March  4,  1893,  the  country  was  prosperous.  When  he  went 
out  of  office,  March  4,  1897,  the  country  was  almost  on  the 
verge  of  bankruptcy,  and  the  worst  prolonged  depression  in 
business  that  the  nation  has  ever  experienced  prevailed  during 
the  greater  part  of  the  time.  Had  it  not  been  for  the  agitation 
regarding  free-trade  theories,  together  with  certain  other  Uto- 
pian schemes  of  reform,  the  good  times  which  the  country 
enjoyed  during  the  last  year  of  General  Harrison's  administra- 
tion would  in  all  probability  have  been  continued  indefinitely. 

Now  it  seems  to  be  the  popular  belief  that  when  Mr.  Cleve- 
land ran  for  President  in  1892,  after  having  been  defeated  by 
General  Harrison  in  1888,  he  was  the  candidate  of  the  Demo- 
cratic party.  He  was  nominally  and  officially  so,  it  would 
appear,  but  he  was  besides  a  popular  candidate,  and  did  not 
seem  to  own  allegiance  to  any  party.  His  aim  from  the  first 
was  to  catch  the  popular  ear  and  to  make  the  impression  deep 
in  the  hearts  of  the  people  that  he  was  their  candidate  irrespec- 


Il6         THE  WALL   STREET   POINT  OF   VIEW. 

tive  of  party.  That  portion  of  his  devotion  which  pertained  to 
party  he  seemed  to  regard  only  as  a  matter  of  form,  a  kind  of 
principle  of  politeness,  with  the  formality  of  which  political 
society  expected  compliance  as  mere  pantomime,  without  put- 
ting any  soul  into  it  or  having  any  conscientious  sensations 
about  it.  Both  his  letters  of  acceptance  and  his  speech  on 
taking  the  oath  of  office  bear  out  his  theory,  and  it  was  the 
perception  by  the  people  of  this  feeling  on  his  part  that  in 
large  measure  drew  to  him  so  many  heterogeneous  elements 
and  gave  him  such  a  large  majority  over  President  Harrison. 

He  drew  from  all  shades  of  politics  and  factions  to  swell  his 
immense  majority,  from  the  Populists  and  protectionists  as 
well  as  from  the  free-traders,  and  herein  is  revealed  a  part  of 
the  mystery.  Careful  investigation  by  expert  politicians  and 
journalists  after  the  election  showed  the  fact  that  even  pro- 
tectionists voted  for  him,  without  being  able  to  assign  a  reason 
other  than  that  they  wanted  a  change  and  desired  to  experi- 
ment. Farmers  and  others  said  so,  while  admitting  that  they 
had  enjoyed  greater  prosperity  during  the  two  former  years 
of  the  operation  of  the  McKinley  tariff  than  ever  before. 
Such  instances  as  these  only  tend  to  deepen  the  mystery,  and 
throw  us  back  to  the  reflection  that  Mr.  Cleveland,  amid  the 
discussion  of  a  great  variety  of  topics,  never  ceased  to  vibrate 
one  chord  wherever  he  had  the  opportunity,  namely,  that  he 
was  the  representative  of  the  people,  always  their  obedient 
servant  and  ready  to  do  their  will  and  perform  their  behests  at 
all  times.  Whatever  derelictions  there  might  be  from  these 
professions,  they  did  not  seem  to  count  with  the  multitude 
either  before  or  after  the  election,  at  least  for  the  first  year  of 
his  second  term. 

There  could  be  no  stronger  proof  of  great  personality,  and 
that  certain  hypnotic  potencies  are  largely  developed  in  Mr. 
Cleveland.  It  is  a  proof  of  the  attributes  of  generalship. 
Nothing  drew  the  soldiers  of  Napoleon  closer  to  him  than  a 
temporary  defeat.  This  was  true  in  every  instance  until  Water- 
loo, and  notably  so  after  Moscow.  Mr.  Cleveland  will  have  no 
chance  of  experimenting  on  a  Moscow  or  a  Waterloo.  He  re- 


EX-PRESIDENT   CLEVELAND   CONSIDERED.       117 

tired  peacefully  and  in  good  order,  not  to  a  St.  Helena,  but  to 
a  Fontainebleau  at  Princeton,  New  Jersey,  where  he  entered 
into  the  full  enjoyment  of  domestic  happiness. 

Mr.  Cleveland  may  employ  some  of  his  leisure  hours  in 
writing  the  inside  history  of  his  administration,  but  it  is 
questionable  if  he  himself  can  satisfactorily  explain  the  many- 
sided  traits  of  character  which  he  displayed  during  the  period 
of  his  toilsome  and  arduous  experience  in  Washington.  Ma- 
caulay  in  his  review  of  Machiavelli  says  :  — 

"Two  characters  altogether  dissimilar  are  united  in  him.  They 
are  not  merely  joined,  but  interwoven.  They  are  the  warp  and  woof 
of  his  mind,  and  their  combination,  like  that  of  the  variegated  threads 
in  shot  silk,  gives  to  the  whole  texture  a  glancing  and  ever  changing 
appearance.  The  explanation  might  have  been  easy  if  he  had  been 
a  very  weak  or  very  affected  man.  But  he  was  evidently  neither  the 
one  nor  the  other.  His  works  prove,  beyond  all  contradiction,  that 
his  understanding  was  strong,  his  taste  pure,  and  his  sense  of  the 
ridiculous  exquisitely  keen." 

Now,  this  is  very  high  praise  from  the  great  English  essayist, 
critic,  and  historian,  bestowed  upon  a  man  who  has  been  uni- 
versally execrated  on  account  of  his  politics  and  diplomacy ; 
and  it  is  curious  how  closely  this  particular  characterization  will 
apply  to  Mr.  Cleveland,  unlike  the  wily  Italian  as  the  downright 
and  honest  "  Grover  "  is.  Concerning  one  point  of  the  com- 
parison, however,  —  the  last  clause,  "  his  sense  of  the  ridiculous 
exquisitely  keen,"  —  I  am  in  doubt.  If  it  were  on  record  that 
Mr.  Cleveland  had  laughed  heartily  when  the  Wilson  Bill  was 
sent  to  him  with  the  Senate  amendments,  then  this  fragment 
of  Macaulay's  description  of  the  great  Florentine  statesman 
might  apply  with  some  modifications  to  him.  He  appears  to 
have  been  many-sided,  yet  without  much  inconsistency,  para- 
doxical as  it  may  seem  ;  and  possibly  the  multi-sided  aspect  of 
the  man  may  have  been  more  in  appearance  than  in  reality. 
It  may  have  been  the  reflection  of  others,  but,  like  St.  Paul,  he 
appeared  at  times  to  be  "all  things  to  all  men."  This  was 
doubtless  the  effect  of  reflex  action.  Several  political  parties 


II 8          THE   WALL   STREET   POINT  OF   VIEW. 

and  factions,  holding  diverse  opinions,  each  seemed  to  consider 
him  as  the  one  man  who  could  best  represent  them.  Hence 
we  perceive  one  secret  of  his  large  majority.  He  proclaimed 
himself  the  candidate  of  the  people,  and  the  large  majority  took 
him  at  his  word,  regarding  as  minor  matters  in  their  political 
faith  what  formerly  had  been  considered  of  the  first  impor- 
tance. 

The  support  which  the  bankers  gave  to  Mr.  Cleveland  illus- 
trates how  men  took  him  at  his  personal  word.  Although  he 
accepted  the  Democratic  platform  in  its  entirety,  yet  the  bankers 
connected  with  the  national  banking  system  gave  him  a  hearty 
support,  despite  the  fact  that  he  was  bound  to  favor,  so  far  as 
executive  favor  can  go,  the  plank  in  the  platform  which  recom- 
mended the  abolition  of  the  ten  per  cent,  tax  on  the  state  banks, 
a  step  which,  in  all  probability,  would  have  exercised  a  demoral- 
izing influence  on  our  whole  currency  system.  Yet  the  bankers 
seemed  to  overlook  this  very  important  point,  in  view  of  the 
fact  that  he  was  sound  on  the  question  of  the  gold  basis.  To 
that  all  other  considerations  were  secondary.  Again,  high 
tariff  men  who  had  hitherto  seemed  to  pin  their  faith  on  Major 
McKinley's  sleeve  with  the  enthusiasm  of  Mussulman  devotees 
to  Mahomet,  voted  for  Mr.  Cleveland  in  spite  of  the  fact  that 
he  denounced  the  tariff  laws  as  "  the  vicious,  inequitable,  and 
illogical  source  of  unnecessary  taxation."  Even  Populists, 
anarchists,  and  socialists  gathered  to  his  standard,  notwithstand- 
ing his  well-known  antipathy  to  all  enemies  of  a  firmly  estab- 
lished government  by  the  will  of  the  people  on  a  conservative 
and  permanent  basis. 

The  attraction  of  such  diverse  elements  can  be  accounted 
for  only  by  the  strength  of  his  personality,  and  by  the  addi- 
tional fact  that  there  must  have  been  something  in  him  which 
inspired  confidence. 

When  he  saw  his  way  clearly  he  was  usually  prompt  in 
action,  though  some  of  his  unaccountable  delays  were  irritating 
to  the  people  as  well  as  injurious  to  public  prosperity.  His 
remarkable  quality  of  promptitude  in  action  was  manifested  in 
a  very  laudable  manner  in  the  suppression  of  the  railroad  riots 


EX-PRESIDENT   CLEVELAND   CONSIDERED.       119 

at  Chicago.  The  country  was  then  on  the  brink  of  a  revolu- 
tion. Governor  Altgeld  of  Illinois  did  not  show  any  inclina- 
tion to  suppress  the  riots.  Adhering  closely  and  technically  to 
the  language  of  the  Constitution,  he  did  not  see  the  necessity 
of  calling  on  the  United  States  troops  until  the  forces  within 
the  State  at  his  disposal  were  proved  unequal  to  the  task,  and 
he  had  apparently  no  desire  even  to  utilize  those  forces.  In 
fact,  he  appeared  to  be  rather  pleased  with  the  uprising  against 
the  capitalists,  the  movement  being  in  accordance  with  his 
views  on  national  politics,  and  the  rule  of  the  rabble  appear- 
ing to  him  as  the  proper  means  of  establishing  a  paternal  gov- 
ernment. 

In  this  extremity  General  Schofield,  observing  with  the  keen 
eye  of  a  practical  leader  in  an  emergency,  that  the  passions 
already  engendered  in  the  mob  were  gathering  strength  and 
ferocity  every  hour,  concluded  that  the  incipient  insurrection 
might  soon  be  fanned  into  a  revolutionary  flame  and  extend"  all 
over  the  Union.  In  fact,  it  appeared  as  if  the  country  might 
be  threatened  with  something  as  direful  as  another  civil  war. 
He  therefore  lost  no  time  in  consulting  the  Attorney- General, 
Mr.  Olney,  to  find  out  if  there  were  no  means  of  quelling  the 
riot  by  Federal  authority  without  depending  on  Governor 
Altgeld.  Mr.  Olney  soon  discovered  that  the  case  involving 
the  Chicago  riots  was  not  confined  to  the  State  of  Illinois,  but 
was  an  interstate  affair  of  national  concern,  and  that  the  Fed- 
eral government  had  the  right  to  interfere  with  the  train- 
wreckers  for  the  purpose  of  protecting  the  United  States  mails. 
Thus  the  ostensible  plea  of  Governor  Altgeld  was  set  aside,  and 
the  United  States  authorities  held  the  fort.  President  Cleve- 
land, as  commander-in-chief  of  the  army,  promptly  gave 
orders  that  Federal  troops  should  be  sent  to  Chicago  for  the 
purpose  of  reducing  to  order  and  decent  behavior  all  riotous 
persons  who  should  attempt  to  wreck  railroad  cars  containing 
United  States  mail.  The  troops  came  and  conquered,  with- 
out the  shedding  of  much  blood,  and  the  revolution  was  nipped 
in  the  bud.  The  labor  unions  all  over  the  country,  restless,  and 
tempted  to  a  simultaneous  rising  by  Eugene  V.  Debs,  were 


120          THE   WALL   STREET   POINT   OF   VIEW. 

quieted  by  this  display  of  force,  and  since  then  there  has 
been  no  serious  show  of  hostility  against  capital. 

Had  it  not  been  for  Mr.  Cleveland's  promptness  on  that  oc- 
casion, it  is  hard  to  say  how  the  trouble  might  have  ended.  If 
he  had  been  a  man  of  weak  and  vacillating  purpose,  the  forces 
of  disorder  would  doubtless  have  made  rapid  headway  while  he 
wars  coming  to  a  decision  ;  but  the  emergency  in  question  shows 
that  he  has  a  well-balanced  mind,  that  he  is  quick  to  apprehend 
combinations  of  circumstances,  real,  probable,  and  possible,  has 
the  judgment  and  comprehension  to  devise  plans  to  meet  them, 
and  the  courage  to  execute  the  plans  without  hesitating  or 
wavering. 

These  are  a  few  of  the  qualities  of  a  great  general,  but  not 
all.  The  statesman  and  the  general  are  seldom  united  in  the 
same  person,  except  in  military  geniuses,  like  Caesar,  Scipio, 
Marcus  Aurelius,  Justinian,  Napoleon,  and  a  few  others.  A 
large  number  of  generals  aspire  to  be  considered  statesmen  of 
the  highest  type,  but  they  are  generally  failures,  like  the  Duke 
of  Wellington,  for  instance. 

In  statesmanship,  it  must  be  candidly  confessed,  Mr.  Cleve- 
land was  not  as  sagacious  as  some  of  the  great  occasions 
required.  Yet  some  of  his  mistakes  can  probably  be  laid  to 
the  charge  of  these  very  attributes  of  generalship,  one  of  which 
is  to  assail  the  enemy  at  every  weak  point  and  on  every  favor- 
able opportunity,  to  be  constantly  on  the  lookout  for  defects  in 
his  armor,  and  to  strike  vigorously  at  those  defects.  Now  the 
very  thing  that  may  be  considered  bravery  of  the  highest  type 
in  a  military  officer  may  also  be  regarded  as  indiscretion  in  a 
statesman.  The  Venezuela  panic  message,  for  instance,  mixed 
the  expressions  of  a  statesman  with  the  brusqueness  of  a  gen- 
eral of  the  army.  If  it  had  been  carefully  edited  by  a  calm 
statesman,  it  would  have  been  much  better  both  for  the  personal 
comfort  of  the  author  and  for  the  business  interests  of  the 
country. 

But  Mr.  Cleveland  might  not  have  permitted  anybody  to  draw 
the  blue  pencil  through  the  last  paragraph  of  that  message,  in 
which  the  chief  source  of  trouble  lay.  It  is  probable  that  Mr. 


EX-PRESIDENT   CLEVELAND   CONSIDERED.       121 

Olney  did  propose  to  do  so,  but  was  checked  in  the  attempt. 
Mr.  Cleveland  has  always  been  decidedly  averse  to  relinquish- 
ing his  individuality,  and  its  bold  assertion,  more  in  action  than 
words,  perhaps,  is  one  of  the  secrets  of  his  success  in  bearing 
down  opposition  and  succeeding  against  the  onslaughts  both  of 
friends  and  enemies.  Take  the  case  of  Tammany,  for  instance, 
in  Cleveland's  last  campaign.  This  solid  organization  imagined 
that  it  held  New  York  as  in  a  safe  for  which  nobody  but  the 
"  boss  "  had  the  combination,  and  the  state  committee  of 
seventy-two  had  instructions  from  that  mighty  mogul  to  arrange 
matters  politically  so  that  Mr.  Cleveland  would  be  excluded 
from  the  White  House.  Bourke  Cockran,  moreover,  the  official 
orator  of  Tammany,  who  has  since  done  "  works  meet  for  re- 
pentance," denounced  the  man  of  destiny,  bringing  all  the  tricks 
of  the  orator  most  effective  and  telling  with  the  average  audi- 
ence, to  aid  his  purpose.  Vituperation  in  its  various  forms  was 
directed  against  the  popular  candidate,  and  satire,  cynicism, 
and  irony  were  hurled  in  reckless  profusion  at  him.  "  Grover 
Cleveland,"  said  the  silver-tongued  orator  in  a  tone  of  wither- 
ing sarcasm,  "  is  the  most  popular  man  in  the  country  every  day 
in  the  year,  except  election  day."  This  hit  drew  roaring  ap- 
plause, but  it  proved  a  terrible  boomerang  to  Cockran  on  the 
8th  of  November  following  that  applause. 

I  have  referred  to  Mr.  Cleveland's  habit,  in  whatever  he  said 
or  wrote,  of  keeping  in  prominence  the  idea  that  the  people 
were  the  first  object  of  consideration,  and  that  parties  and  their 
machines  should  be  relegated  to  a  secondary  position  or  totally 
ignored.  His  method  in  this  respect  was  pretty  well  illustrated 
in  a  speech  at  the  Manhattan  Club,  a  short  time  after  his  last 
election,  a  speech  which  also  reveals  what  he  himself  considered 
largely  as  the  secret  of  his  success.  He  said :  — 

"  The  American  people  have  become  politically  more  thoughtful 
and  more  watchful  than  they  were  ten  years  ago.  They  are  con- 
sidering now,  vastly  more  than  they  were  then,  political  principles 
and  party  policies,  in  distinction  from  party  manipulation  and  the 
distribution  of  rewards  for  partisan  services  and  activities.  In  the 
present  mood  of  the  people  neither  the  Democratic  party  nor  any 


122         THE  WALL   STREET  POINT  OF  VIEW. 

Other  party  can  gain  and  keep  the  support  of  the  majority  of  oar 
Toters  by  merely  promising  or  distributing  personal  spoils  and  favors 
from  partisan  supremacy.  They  are  thinking  of  principles  and 
policies,  and  they  will  be  satisfied  with  nothing  short  of  the  utmost 
good  faith  in  the  redemption  of  the  pledges  to  serve  them  in  their 
collective  capacity  by  the  inauguration  of  wise  policies  and  giving  to 
them  honest  government.  I  would  not  have  this  otherwise,  for  I 
am  •OBng  that  the  Democratic  party  shall  see  that  its  only  hope  of 
successfully  meeting  the  situation  is  by  being  absolutely  and  patrioti- 
cally true  to  itself  and  its  profession.  This  is  a  sure  guaranty  of 
•cocss,  and  1  know  of  no  other." 

The  last  words  of  this  sapient  advice  naturally  recall  the 
language  of  Shakespeare  in  the  month  of  old  Polonius  in  that 
famous  advice  to  his  son,  who  was  just  going  out  into  the  world : 

"Tms  above  aD,  —  to  thine  own  self  be  true  ; 
And  h  most  follow,  as  the  night  the  day, 
Thou  canst  not  then  be  false  to  any  man." 


CHAPTER   XVII. 

THE  SIGNIFICANCE  OF  THE  WILSON  TARIFF  LAW. 

Intended  to  wipe  out  every  vestige  of  Republican  tariff  legislation.  —  How 
the  law  has  proved  a  boomerang  and  deprived  the  Democrats  of  a 
return  to  power  for  a  long  period.  —  How  men  accustomed  only  to 
little  places  and  little  interests  cannot  be  expected  to  deal  with  great 
matters. 

THE  special  purpose  of  the  Wilson  Bill  was  to  wipe  out 
every  enduring  vestige  in  tariff  legislation  of  the  Repub- 
lican party.  That  party  had  been  in  power  for  thirty-two  years, 
and  now  that  the  Democrats  had  got  into  office  for  the  first 
time  since  the  war,  they  were  anxious  to  make  a  record  all 
their  own,  with  a  view  of  installing  themselves  for  a  long  period, 
as  the  Republicans  had  done.  The  party  was  greatly  elated. 
It  determined  to  make  a  clean  sweep  of  the  country,  and  to 
that  end  it  was  necessary  to  come  before  the  people  with  a 
popular  issue ;  but  the  popularity  of  the  issue  chosen  proved 
delusive.  The  issue  was  free  trade  thinly  disguised  under  the 
cloak  of  "  tariff  for  revenue  only  " ;  and  as  soon  as  the  Demo- 
cratic party  began  to  doctor  the  tariff,  want  of  confidence  in 
the  wisdom  of  the  Administration  began  to  make  itself  mani- 
fest, and  this  feeling  increased  as  the  presumable  reform  in 
tariff  went  on.  The  people  did  not  want  it,  never  did  want  it 
in  this  country,  and  never  will  want  it  in  its  entirety,  although 
we  will  naturally,  as  we  become  permanently  a  large  creditor 
nation,  gravitate  nearer  and  nearer  to  it. 

The  Wilson  Tariff  Law  may  prove  a  blessing  in  disguise, 
however,  as  it  has  effectually  barred  the  Democratic  party 
from  raising  the  free-trade  issue  again  for  many  years.  Of 
course  it  has  been  a  very  expensive  experiment  for  the  country, 

123 


124         THE   WALL   STREET   POINT   OF  VIEW. 

having  cost  it,  in  panics,  hundreds  of  millions  of  dollars,  per- 
haps ;  but  the  history  of  the  experiment  will  stand  in  our 
annals  as  a  solemn  warning  to  voters  for  all  time  to  let  free- 
trade  theories  alone  if  they  want  to  see  the  country  prosperous. 

Pursuing  their  belligerent  method  of  reasoning,  then,  the 
first  aim  of  the  Democrats  was  to  get  the  McKinley  Law  out 
of  the  way.  Major  McKinley  had  been  a  conspicuous  leader 
in  the  Republican  party,  and  the  law  that  bore  his  name 
was  a  popular  measure  and  one  calculated  to  bring  prosperity 
in  its  wake,  as  was  abundantly  proved  by  results,  until  free- 
trade  agitation  blocked  the  path  of  prosperity.  It  would 
never  do,  reasoned  the  free-traders,  to  let  any  part  of  that 
law  remain  on  the  statute  book  as  a  menace  to  the  towering 
ambition  of  Democrats  and  their  ideas  of  sweeping  reforms. 
It  would  spoil  the  Democratic  issue,  and  throw  discredit  on 
that  bait  of  cheap  clothing  offered  to  voters  who  would  have 
no  money  to  buy  it  under  a  free- trade  regime.  It  was  resolved, 
therefore,  that  free  trade  in  the  disguise  of  "  tariff  for  revenue 
only  "  would  prove  an  effective  scheme  to  capture  voters. 

The  eventual  election  of  Major  McKinley,  however,  was  a 
sad  blow  to  this  fondly  cherished  hope.  Instead  of  the  Wilson 
Law  being  instrumental  in  consigning  the  name  of  McKinley 
to  oblivion,  as  had  been  intended,  it  has  been  one  of  the  chief 
instruments  in  making  him  a  more  marked  personage  than 
ever,  and  has  helped  materially  to  give  him  a  chance  of  mak- 
ing a  world-wide  and  durable  reputation  among  the  political 
benefactors  of  his  day  and  generation. 

As  the  Wilson  Law  was  calculated  to  take  away  from  the 
wage  earner  a  considerable  portion  of  what  he  had  been  accus- 
tomed to  earn,  in  many  instances  from  one  third  to  one  half, 
besides  throwing  hundreds  of  thousands  out  of  employment,  it 
did  not  matter  to  him  whether  the  price  of  a  coat  was  two,  five, 
or  ten  dollars.  He  could  get  no  money  to  buy  it  at  any  price. 
So  that  argument  was  soon  demonstrated  to  be  a  cruel  mockery 
to  the  wage  earner,  however  plausible  or  conclusive  it  might 
seem  from  a  theoretical  and  professional  point  of  view. 

It  was  no  wonder  that  Mr.  Cleveland  was  highly  incensed 


SIGNIFICANCE  OF  WILSON   TARIFF   LAW.       125 

when  he  discovered  that  an  obstinate  Senate  had  altered  that 
solemn  production,  which  he  had  regarded  as  a  sort  of  new 
Declaration  of  Independence,  into  a  kind  of  serio-comic  farce, 
and  that  the  document,  when  presented  to  the  President  and 
compared  with  the  original,  afforded  a  fine  illustration  of  the 
Napoleonic  maxim,  "  it  is  but  one  step  from  the  sublime  to  the 
ridiculous,"  —  the  step  on  that  occasion  being  from  the  House 
of  Representatives  to  the  maliciously  humorous  Senate. 

Nevertheless,  those  640  amendments  inserted  by  the  Senate, 
though  they  were  loudly  denounced  at  the  time  by  the  free- 
trade  party  as  ruinous  to  the  beneficent  purposes  of  the  bill 
as  originally  designed,  turned  out  to  be  an  unexpected  blessing 
to  the  country.  The  Senate  is  entitled  to  the  praise  and  ad- 
miration of  the  whole  people  on  account  of  its  masterly  mutila- 
tion of  that  bill,  for  if  the  measure  had  passed  in  the  shape 
that  it  left  the  House,  it  would  have  been  fraught  with  even 
more  financial  mischief.  The  feeling  of  distrust  and  worry  in- 
flicted on  the  seventy  million  inhabitants  of  this  country  would 
have  made  them  appear  so  careworn  and  broken  down  in  health 
and  spirit,  as  well  as  in  pocket,  that  people  who  had  not  seen 
each  other  for  several  years  would  have  found  as  much  diffi- 
culty in  mutual  recognition,  as  Professor  Wilson  experienced 
in  the  identification  of  his  own  political  progeny  after  the  640 
amendments  had  been  attached  thereto. 

But  seriously,  this,  like  many  other  fiascos,  goes  to  show  that 
if  legislators  want  to  be  able  to  judge  aright  in  national  finan- 
cial affairs,  if  they  aim  at  broad-gauge  legislation  and  wish  to 
shed  the  shell  inseparable  from  their  existence  in  village  com- 
munities, they  must  go  to  headquarters  occasionally,  and  that 
is  New  York  City.  If  they  want  to  exercise  clear  judgment  in 
regard  to  business,  as  commingled  with  their  legislative  functions 
and  purposes  in  the  interest  of  the  whole  people  and  in  touch 
with  the  country  at  large,  they  must  become  imbued,  verily 
saturated,  with  cosmopolitan  ideas.  After  working  themselves 
for  a  time  into  the  belief — as  by  this  faith  they  shall  be  saved 
—  that  financially  at  least  New  York  is  virtually  the  United 
States,  in  the  same  sense  that  London  is  England,  and  Paris  is 


126         THE  WALL   STREET   POINT   OF  VIEW. 

France,  they  should  return  home  and  reflect  studiously  on  their 
experience. 

When  this  supposable  trip  to  the  metropolis  is  over,  and  a 
day  or  two  of  reflection  is  indulged  in  regarding  the  journey 
thus  enjoyed,  the  eyes  of  the  traveler  will  gradually  open, 
and  he  will  begin  to  wonder  why  he  has  been  trifling  his 
time  away  around  his  native  town  for  half  a  lifetime  with  his 
eyes  half  shut.  His  ears  also  will  have  passed  through  a  course 
of  similar  development,  and  his  whole  intellectual  capacity  will 
be  endowed  with  vastly  improved  powers  of  absorption,  recep- 
tion, and  retention.  For  the  first  week  or  so  he  will  look  upon 
his  fellow  townsmen  with  a  feeling  similar  to  that  with  which 
Captain  Lemuel  Gulliver  regarded  the  Lilliputians,  according 
to  the  account  given  by  Dean  Swift  of  that  remarkable  nation 
of  midgets  ;  and  after  going  through  this  preliminary  process, 
the  legislator  will  find  himself  much  more  capable  of  legislat- 
ing in  the  interests  of  finance  and  business,  and  the  measures 
which  he  may  introduce  or  influence  by  his  speeches  and  advice 
in  committee,  or  on  the  floor,  will  take  on  a  more  statesmanlike 
character  than  those  that  he  had  assisted  in  passing  prior  to  his 
metropolitan  experience. 

Moreover,  he  will  become  a  missionary  and  make  converts 
by  the  dozen  of  the  stay-at-homes.  He  will  have  discovered 
that  a  month's  travel  is  worth  a  year's  reading,  or  a  college  or 
office  education,  for  all  the  practical  purposes  of  mental  evolu- 
tion ;  and  as  soon  as  he  gets  through  the  next  session  he  will 
come  again  and  probably  bring  a  few  of  his  friends  with  him. 
He  may  finally  settle  down  here  and  become  a  millionaire. 
There  is  no  romancing  about  this ;  I  can  quote  historical  and 
biographical  examples  within  my  own  personal  experience  for 
the  probabilities  and  possibilities  which  I  am  now  considering. 

People  who  have  been  born  in  small  towns  and  interior 
places,  and  leave  those  haunts  of  boyhood  in  early  youth,  may 
return  to  them  for  social  reminiscences  or  to  renew  the  feelings 
of  family  ties,  but  they  never  go  back  there  to  get  any  infor- 
mation or  knowledge  to  guide  them  as  lawyers,  statesmen,  or 
financiers.  The  information  which  they  must  seek  is  not  there 


SIGNIFICANCE   OF  WILSON   TARIFF   LAW.       127 

to  be  obtained.  We  never  read  of  Daniel  Webster,  for  in- 
stance, going  back  to  Salisbury  in  New  Hampshire  to  post 
himself  for  any  of  his  great  speeches ;  nor  do  we  ever  hear  of 
Henry  Clay  having  gone  to  Ashland,  near  Lexington,  Kentucky, 
for  that  purpose ;  nor  of  John  C.  Calhoun  returning  to  South 
Carolina. 

The  metropolitan  community,  for  these  and  many  other 
reasons,  is  the  great  center  of  attraction.  It  draws  within  its 
irresistible  influence  people  from  all  parts  of  the  globe,  as  the 
loadstone  mountain  was  said  to  have  drawn  Mahomet  in  his 
coffin.  But,  unlike  the  case  of  Mahomet,  the  metropolis  draws 
the  people  while  they  are  very  much  alive,  and  the  more  vigor- 
ous they  are  the  more  easily  it  draws  them. 

It  is  not  from  the  best  of  libraries  that  people  learn  most 
in  the  metropolis.  It  is  from  the  actual  contact  with  such  a 
large  variety  of  people  of  many  minds  and  opinions,  and  of 
many  nations,  that  are  constantly  to  be  met  there.  This 
has  a  quickening  effect  on  the  perceptive  faculties  that  men 
who  pass  their  existence  in  small  towns  never  experience. 
"Iron  sharpeneth  iron,"  says  Solomon;  "so  a  man  sharpeneth 
the  countenance  of  his  friend."  There  is,  perhaps,  no  place 
where  this  shrewd  observation  of  the  wise  king  of  Israel  is  more 
vividly  realized  than  in  Wall  Street. 

Some  men  attempt  to  ignore  this  educational  power  and  civ- 
ilizing influence  of  large  cities,  but  had  it  prevailed  in  the  last 
Democratic  Congress,  there  would  have  been,  in  truth,  no  Wil- 
son Bill  to  menace  our  prosperity,  no  paralyzing  amendments, 
and  no  regrets  and  sorrows  and  heartburns  over  what  was  and 
what  could  never  be. 


CHAPTER   XVIII. 

A  BATCH  OF  LEGACIES. 

Devised  and  bequeathed  to  the  Republican  party  by  the  last  will  and  tes- 
tament of  the  last  Democratic  Congress. — The  unfinished  business  of 
eight  years  of  hard  and  anxious  work  in  the  White  House.  —  Lincoln's 
views  on  the  Constitution  and  the  tariff. 

THERE  never  has  been  another  such  large  batch  of  lega- 
cies left  by  any  retiring  political  party  in  the  United 
States  since  the  origin  of  the  Republic  as  that  devised  by  the 
Democratic  party  to  its  successors  in  office. 

Not  one  of  the  various  reforms  which  the  President  intro- 
duced and  had  toiled  over  many  a  day  and  night  during  eight 
years  was  satisfactorily  consummated.  All  were  left  in  such  an 
inchoate  condition  that  we  might  aptly  refer  to  them  as  "  unfin- 
ished business."  If  that  archaic  prejudice  which  stands  in  the 
way  of  a  President's  enjoying  a  third  term  did  not  exist,  perhaps 
Mr.  Cleveland  might  have  been  afforded  an  opportunity  of  see- 
ing the  fruits  of  his  anxious  thoughts  and  arduous  labors,  and  the 
country  might  have  been  made  permanently  prosperous  and 
happy  by  the  result.  Republics  are  proverbially  ungrateful, 
however,  and  Mr.  Cleveland  found  this  to  be  true.  Perhaps 
the  numerous  cautions  and  the  sound  advice  which  he  has  been 
in  the  habit  of  giving  the  Democratic  party  may  bear  fruit 
when  that  party  gets  into  power  again,  and  his  reforms  may  be 
prosecuted,  but  probably  not  with  the  same  vigor  and  enthu- 
siasm with  which  they  were  begun.  Future  generations  may 
produce  men  of  as  great  vim  and  self-confidence  as  Mr.  Cleve- 
land, but  it  is  doubtful. 

Chief  among  the  legacies,  that  of  the  tariff  has  been  already 
dealt  with  by  the  McKinley  administration,  and  the  deficit  in 

128 


A   BATCH   OF   LEGACIES.  129 

the  revenue,  which  was  a  source  of  so  much  trouble  to  the 
Democrats,  has  been  changed  into  a  surplus. 

It  may  not  be  out  of  place  to  note  here  that  England  and 
English  manufacturers  were  even  more  disappointed  than  Mr. 
Cleveland  that  he  was  not  chosen  for  a  third  term.  He  is  one 
of  the  most  popular  Americans  in  Great  Britain.  Yes,  many  of 
the  English  regard  Mr.  Cleveland  as  a  second  Washington, 
despite  the  matter  of  the  Venezuela  boundary,  thus  proving 
that  the  bread-and-butter  question  appeals  more  strongly  to 
the  human  heart  with  many  people  than  does  any  feeling  of 
patriotism.  Free  trade  with  this  country  would  be  one  of  the 
greatest  instrumentalities  possible  for  enriching  England  at  our 
expense.  It  would  make  of  us  a  semi-philanthropic  treasury 
from  which  England  could  draw  largely  as  long  as  we  should 
be  able  to  avert  national  bankruptcy.  When  this  crisis  should 
arrive,  England  might  send  over  a  receiver,  wind  the  thing  up, 
and  establish  most  of  her  manufactures  on  this  soil.  This 
would  have  the  merit  of  being  a  bloodless  victory  for  the  auto- 
crats of  cheap  labor. 

Of  the  other  half  dozen  or  so  of  reforms  projected  by  Mr. 
Cleveland,  none  but  the  repeal  of  the  purchasing  clause  of  the 
Sherman  Silver  Law  came  to  any  definite  result,  and  that,  as 
I  have  shown  elsewhere,  was  so  ill-timed  and  otherwise  mis- 
managed that  it  caused  a  disastrous  panic.  The  abortive  at- 
tempts made  at  these  reforms  were  a  fruitful  auxiliary  cause  of 
our  financial  ills  during  the  four  years  prior  to  Mr.  McKinley's 
election. 

With  regard  to  Mr.  Cleveland's  personal  interference  in 
originating  legislation,  as  in  the  case  of  the  Sherman  Bill,  he 
seems  to  have  disregarded  two  of  his  own  maxims,  namely, 
"  Public  office  is  a  public  trust,"  and  "The  duty  of  a  President 
is  simply  executive."  As  I  have  formerly  remarked,  the  rule 
of  action  as  laid  down  in  the  Constitution  regarding  the  extent 
to  which  the  President  may  go  in  giving  Congress  "  information 
of  the  state  of  the  Union,"  and  in  "  recommending  for  its  con- 
sideration such  measures  as  he  shall  judge  necessary  and  expe- 
dient," may  give  rise  to  some  nice  distinctions,  as  may  also  the 
K 


130         THE   WALL   STREET    POINT   OF   VIEW. 

further  power  accorded  to  him  by  the  same  instrument "  to  con- 
vene both  Houses  or  either  of  them  on  extraordinary  occasions." 
These  points  have  been  subjects  of  considerable  comment  by 
jurists,  politicians,  and  statesmen ;  but  Abraham  Lincoln,  in  one 
of  his  short,  pithy,  common-sense  analyses,  has  probably  thrown 
more  light  on  the  subject  than  the  majority  of  those  who  have 
attempted  it.  Mr.  Lincoln,  referring  to  this  provision  in  the 
Constitution  (Article  II.,  3,  i)  and  also  to  the  tariff  question, 
says  :  — 

"By  the  Constitution,  the  Executive  may  recommend  measures 
which  he  may  think  proper,  and  he  may  veto  those  which  he  thinks 
improper,  and  it  is  supposed  that  he  may  add  to  these  certain  indi- 
rect influences  to  affect  the  action  of  Congress.  My  political  educa- 
tion strongly  inclines  me  against  a  free  use  of  any  of  these  means  by 
the  Executive  to  control  the  legislation  of  the  country.  As  a  rule,  I 
think  it  better  that  Congress  should  originate  as  well  as  perfect  its 
measures  without  external  bias.  I  therefore  would  rather  recommend 
to  every  gentleman  who  knows  that  he  is  to  be  a  member  of  the  next 
Congress,  to  take  an  enlarged  view  and  post  himself  thoroughly,  so 
as  to  contribute  his  part  to  such  an  adjustment  of  the  tariff  as  shall 
produce  a  sufficient  revenue,  and  in  its  other  bearings,  so  far  as  pos- 
sible, be  just  and  equal  to  all  sections  of  the  country  and  classes  of 
the  people." 

If  this  wise  advice  of  the  martyr  President  had  been  always 
taken  by  his  successors,  what  a  boon  it  would  have  con- 
ferred on  the  country  !  But  it  was  not  consonant  with  the  dis- 
position or  cultivated  habits  of  our  late  Executive  to  pay  much 
heed  to  advice,  either  of  ancient  sages  or  modern  legislators. 
When  a  legislator  or  expert  financier,  thinking  he  had  a  good 
thing  to  communicate  to  the  presumable  fountain  of  legislative 
wisdom,  would  call  at  the  White  House,  President  Cleveland 
would  receive  him  cordially,  listen  to  his  statement,  and  then 
make  a  brief  reply,  at  the  conclusion  of  which  he  would  men- 
tally move  the  previous  question,  cutting  off  all  debate  while  he 
preserved  an  attitude  of  politeness  toward  his  visitor,  who  in 
most  instances  soon  grew  weary  of  the  one-sided  conversa- 
tion, and  was  gracefully  bowed  out  by  the  secretary,  who 


A   BATCH   OF   LEGACIES.  131 

doubtless  congratulated  his  chief  that  another  "  crank "  had 
been  summarily  disposed  of. 

The  attempt  to  run  the  government  on  theories,  as  sub- 
stitutes for  practical  measures,  proved,  and  always  will  prove, 
a  signal  failure.  Hence  the  people  thought  that  it  was  safer  to 
return  to  the  old  practical  method  that  had  worked  so  well, 
generally,  for  thirty- two  years. 

One  of  the  remarkable  features  of  the  attempted  legis- 
lation of  the  late  Democratic  administration  was  the  ill-con- 
sidered and  crude  character  of  the  greater  number  of  the 
measures  formulated.  They  showed  evidence  of  being  men- 
tally undigested,  and  exhibited  a  deficiency  in  breadth  of  view 
and  comprehensiveness.  Take,  for  example,  the  Income  Tax 
Bill,  which  was  killed  by  the  United  States  Supreme  Court. 
That  measure  provided  for  throwing  more  than  half  the  burden 
on  the  State  of  New  York,  and  pretty  nearly  all  that  half  on 
New  York  City.  This  was  pleasing  enough  to  the  Southern 
and  Northwestern  people,  and  of  course  made  the  bill  very 
popular  in  those  sections. 

Such  crudeness  and  narrowness  appeared  in  many  legislative 
measures  during  the  last  Democratic  administration.  It  was 
so  with  the  currency  question,  and  also  when  the  administra- 
tion essayed  to  settle  international  complications  by  applying 
to  these  the  ordinary  methods  of  running  party  politics.  The 
idea  of  the  fitness  of  things  seemed  frequently  lost  sight  of, 
and  often  discord  instead  of  harmony  ruled  in  administration 
affairs. 


CHAPTER   XIX. 

TARIFF  FOR  PROSPERITY  ONLY. 

The  invaders  of  our  home  markets  repulsed.  —  Foreign  manufacturers  and 
the  products  of  their  pauper  labor  not  in  demand.  —  Definitions  of 
revenue  tariff  and  protective  tariff.  —  The  latter  fairly  provided  for  in 
the  Dingley  Bill,  and  wool  restored  to  the  farmers.  —  Home  markets 
in  preference  to  foreign.  —  How  McKinley  humorously  caught  the 
clothier  member  for  Boston  on  the  cheap  clothing  argument.  —  Home 
capital  and  home  labor  will  get  a  chance  for  development,  and  the 
time  of  prosperity  has  come.  —  Practical  outcome  of  the  protection 
and  free- trade  doctrines  considered.  —  The  testimony  on  this  subject  of 
two  eminent  witnesses,  James  Buchanan  and  Grover  Cleveland. 

THE  most  important  measure  of  a  Republican  Congress  was 
the  Tariff  Bill.  This,  despite  the  strongest  possible  free- 
trade  opposition,  was  passed  almost  on  the  lines  of  the  former 
McKinley  Bill,  which  during  the  brief  period  of  its  existence 
gave  such  bright  promise  of  permanent  prosperity. 

The  salutary  effect  of  the  late  tariff  legislation  has  been 
demonstrated  most  conspicuously  in  the  unparalleled  showing 
of  our  foreign  trade,  which  I  shall  review  in  the  following  chap- 
ter. Another  good  result  of  the  tariff  law  is  that  a  sufficient 
revenue,  if  economically  administered,  seems  to  be  assured  to 
the  government,  and  that  "  endless  chain,"  which  had  a  con- 
stant tendency  to  deplete  the  treasury  gold  reserve,  and  which 
gave  such  trouble  to  the  last  Democratic  administration,  has 
vanished.  The  Treasury  at  the  end  of  the  fiscal  year  had  a 
gold  surplus  of  $188,000,000;  the  largest,  I  believe,  during  the 
past  eight  years. 

There  can  be  no  doubt  about  the  legitimacy  and  propriety 
of  this  taxation,  for  the  Constitution  of  the  United  States  says 
in  the  Eighth  Section  of  the  First  Article  :  "  Congress  shall 

132 


TARIFF   FOR   PROSPERITY   ONLY.  133 

have  power  to  lay  and  collect  taxes,  duties,  imposts,  and  ex- 
cises to  pay  the  debts  and  provide  for  the  common  defense 
and  general  welfare  of  the  United  States  .  .  .  also  to  regulate 
commerce  with  foreign  nations."  This  authority,  being  the 
highest  law  of  the  land,  places  the  power  of  Congress  to  "  col- 
lect taxes,  duties,  and  imposts  "  beyond  doubt. 

The  question  may  then  arise :  If  Congress  has  power  to 
impose  taxes  other  than  those  for  "  revenue  only,"  has  the  law- 
making  machinery  the  power  to  lay  taxes,  through  tariff  laws, 
for  the  protection  of  American  industries  and  labor?  Most 
decidedly  it  has,  for  it  is  expressly  stated  in  the  section  quoted 
that  these  taxes  are  to  "  provide  for  the  common  defense  and 
general  welfare  of  the  United  States."  There  is  no  provision 
for  defense  more  urgently  required  than  that  against  the  inva- 
sion of  the  needy  manufacturers  of  Europe,  with  their  pauper- 
labor  goods  and  merchandise,  for  the  purpose  of  capturing  our 
markets,  breaking  up  our  manufactories,  and  reducing  our 
great  army  of  artisans  and  laborers  to  their  own  status. 

If  the  free-trade  party  in  this  country  should  get  the  upper 
hand,  the  invasion  suggested  would  be  worse  than  that  of  the 
Goths,  Huns,  and  Vandals  who  overran  western  Europe  and 
eventually  brought  about  the  fall  of  the  Roman  Empire. 

If  anybody  should  consider  this  opinion  as  to  the  possible 
invasion  exaggerated,  I  should  simply  give  him  an  object  lesson 
in  geography.  Europe  has  an  army,  most  of  it  hungry  and 
desperate,  of  312,000,000  to  be  drawn  upon  for  the  purpose 
of  that  invasion,  with  the  forces  of  Asia,  more  hungry  still,  con- 
sisting of  a  reserve  of  800,000,000.  If  100,000,000  of  the 
latter  were  imported  —  a  number  that  would  hardly  be  missed 
—  Americans  would  have  a  hard  time  of  it,  and  this,  or  some- 
thing like  it,  is  the  inevitable  prospect  if  ever  the  free-traders 
should  get  a  chance  of  running  this  country  on  the  lines  indi- 
cated in  the  original  Wilson  Tariff  Bill.  If  these  immigrants 
did  not  appear  here  in  physical  form,  the  fruits  of  their  labor 
would,  and  that  would  be  worse. 

This  contingency,  I  think,  however,  is  now  remote.  The 
people  have  had  a  rude  awakening  from  the  soft  lethargy  into 


134         THE  WALL   STREET   POINT   OF  VIEW. 

which  they  had  been  lulled  by  those  who  promised  to  lead 
them  to  the  Elysian  fields  of  permanent  prosperity,  where,  by 
virtue  of  European  cheap  clothing  and  a  list  of  luxuries  put 
before  their  hungry  gaze  (which  they  had  no  money  to  buy), 
they  might  pass  the  remainder  of  their  days  in  rest,  quietude,, 
and  happiness.  That  dream  has  passed  away,  I  hope  forever ; 
and  the  people  are  able  to  look  back  and  perceive  how  they 
were  misled  and  cajoled  out  of  their  votes  to  create  a  con- 
dition of  things  that  had  brought  the  country,  but  for  its 
wonderful  internal  strength  and  unlimited  resources,  to  the 
very  verge  of  bankruptcy.  Four  years  more  of  that  regime 
would  probably  have  left  the  reserve  corps  of  the  invaders  very 
little  except  land  to  plunder  on  their  arrival.  The  free-trade 
leaders,  with  their  foreign  myrmidons,  seemed  determined  on 
making  a  clean  sweep  of  everything  available,  and  bringing  ruin 
upon  all  that  the  protective  system  had  been  instrumental  in 
building  up  since  the  close  of  the  war. 

True,  their  late  chief  has  not  relinquished  hope  nor  ceased 
trying  to  inspire  the  small  remnant  of  his  adherents  to  maintain 
the  fight  in  the  future.  He  left  office  exhorting  his  followers 
to  "continue  the  struggle"  against  "mad  protection,"  to  "chal- 
lenge boldly  to  open  warfare  the  enemies  of  free  trade,  and 
guard  against  treachery  and  half-heartedness  in  the  camp." 
This  was  the  language  which  he  had  used  a  few  years  before 
to  Mr.  Catchings,  a  Congressional  friend  of  his,  and  these  were 
the  sentiments  with  which  he  still  seemed  to  be  inspired  on 
his  departure  from  the  White  House,  despite  the  signal  defeat 
of  all  the  factions  by  whom  he  had  been  elected. 

His  former  forces,  however,  met  their  defeat  in  November, 
1896,  and  the  McKinley  administration,  despite  the  war  with 
Spain  in  the  meantime,  has  brought  prosperity  to  the  nation,  as 
shown  in  the  unprecedented  balance  of  trade  in  our  favor.  On 
the  subject  of  this  balance  of  trade,  as  exhibited  in  the  report 
of  the  Bureau  of  Statistics,  a  separate  chapter  will  show  the 
prosperous  results  of  the  recent  tariff  law  as  opposed  to  the 
free-trade  idea. 

The  subject  of  tariff  taxes,  or  duties,  divides  itself  into  two 


TARIFF   FOR  PROSPERITY   ONLY.  135 

parts.  One  is  a  tariff  for  revenue  only,  and  the  other  is  a 
tariff  for  both  revenue  and  the  protection  of  labor  and  native 
industries.  Failure  to  recognize  this  distinction  has  led  to  grave 
and  numerous  errors,  one  of  which  is  that  all  articles,  both 
home  and  foreign,  which  are  on  the  tariff  list,  cost  consumers 
the  price  of  the  article  as  estimated  by  the  manufacturer  or 
producer,  to  which  is  added  the  amount  of  the  tariff.  This 
seems  at  first  sight  to  be  very  plausible  reasoning,  but  it  is 
quite  erroneous,  applying  only  to  the  foreign  productions  which 
are  not  also  produced  on  this  side,  or  not  in  sufficient  quantity 
to  supply  demand.  The  consumer  "  pays  the  freight  "  in  that 
case,  but  the  articles  that  are  produced  exclusively  on  the  other 
side  are  in  a  very  small  minority  and  are  becoming  daily 
smaller.  This  is  one  reason  why  there  is  such  deep  anxiety 
there  for  a  share,  and  that  the  lion's  share,  if  possible,  of  our 
markets.  When  a  foreigner  tells  you  that  this  desire  arises 
purely  out  of  international  love  and  amity  for  the  United  States 
and  a  strong  desire  to  patronize  our  country  without  any 
ulterior  motive,  you  should  take  his  statement  cum  grano 
salts,  —  and  sometimes  the  dose  of  salt  must  be  a  very  big 
one.  There  must  be  a  selfish  motive  in  all  trade,  outside  the 
ranks  of  socialists,  and  they  are  unselfish  only  theoretically. 

As  Mr.  McKinley  has  given  the  best  definition  of  these  two 
kinds  of  tariff,  let  us  allow  him  the  floor  on  that  subject.  In 
the  course  of  a  speech  he  says,  regarding  a  revenue  tariff:  — 

"  This  brings  us  face  to  face  with  the  two  opposing  systems,  that 
of  a  revenue  as  distinguished  from  a  protective  tariff,  and  upon  their 
respective  merits  they  must  stand  or  fall.  Now,  what  are  they? 
First,  what  is  a  revenue  tariff?  Upon  what  principle  does  it  rest? 
It  is  a  tariff  or  tax  placed  upon  such  articles  of  foreign  production 
imported  here  as  will  produce  the  largest  revenue  with  the  smallest 
tax;  or,  as  Robert  J.  Walker,  late  Secretary  of  the  Treasury  and 
author  of  the  tariff  of  1846,  from  whom  the  advocates  of  the 
measure  draw  their  inspiration,  put  it :  — 

"'The  only  true  maxim  is  that  which  experience  demonstrates 
will  bring  in  each  case  the  largest  revenue  at  the  lowest  rate  of  duty, 
and  that  no  duty  be  imposed  upon  any  article  above  the  lowest  rate 


136         THE   WALL   STREET   POINT   OF   VIEW. 

which  will  yield  the  largest  amount  of  revenue.  The  revenue  (said 
Mr.  Walker)  from  ad  -valorem  duties  last  year  (1845)  exceeded 
that  realized  from  the  specific  duties,  although  the  average  of  the 
ad  valorem  duties  was  only  23.57  per  cent,  and  the  average  of  the 
specific  duties  41.30  per  cent.,  presenting  another  strong  proof  that 
the  lower  duties  increase  the  revenue.1 

"To  secure  larger  revenue  from  lower  duties  necessitates  largely 
increased  importations,  and  if  these  compete  with  domestic  products 
the  latter  must  be  diminished  or  find  other  and  distant,  and  I  may 
say  impossible,  markets  or  get  out  of  the  way  altogether.  A  genuine 
revenue  tariff  imposes  no  tax  upon  foreign  importations  the  like  of 
which  are  not  produced  at  home  ;  or,  if  produced  at  home,  in  quan- 
tities not  capable  of  supplying  the  home  consumption,  in  which 
case  it  may  be  truthfully  said  the  tax  is  added  to  the  foreign  cost 
and  is  paid  by  the  consumer. 

"  A  revenue  tariff  seeks  out  those  articles  which  domestic  produc- 
tion cannot  supply,  or  only  inadequately  supply,  and  which  the 
wants  of  our  people  demand,  and  imposes  the  duty  upon  them,  and 
permits  as  far  as  possible  the  competing  foreign  product  to  be  im- 
ported free  of  duty.  This  principle  is  made  conspicuous  in  the  bill 
under  consideration ;  for  example,  wool,  a  competing  foreign  prod- 
uct, which  our  own  flock-masters  can  fully  supply  for  domestic 
wants,  is  put  upon  the  free  list,  while  sugar,  with  a  home  product  of 
only  one  eleventh  of  the  home  consumption,  is  left  dutiable." 

Mr.  McKinley  defines  a  protective  tariff  as  follows  :  — 

u  What  is  a  protective  tariff  ?  It  is  a  tariff  upon  foreign  imports  so 
adjusted  as  to  secure  the  necessary  revenue,  and  judiciously  imposed 
upon  those  foreign  products  the  like  of  which  are  produced  at  home 
or  the  like  of  which  we  are  capable  of  producing  at  home.  It  im- 
poses the  duty  upon  the  competing  foreign  product ;  it  makes  it 
bear  the  burden  or  duty,  and,  as  far  as  possible,  luxuries  only 
excepted,  permits  the  non-competing  foreign  product  to  come  in 
free  of  duty.  Articles  of  common  use,  comfort,  and  necessity  which 
we  cannot  produce  here  it  sends  to  the  people  untaxed  and  free 
from  custom-house  exactions.  Tea,  coffee,  spices,  and  drugs  are 
such  articles,  and  under  our  system  are  upon  the  free  list.  It  says 
to  our  foreign  competitor,  if  you  want  to  bring  your  merchandise 
here,  your  farm  products  here,  your  coal  and  iron  ore,  your  wool, 
your  salt,  your  pottery,  your  glass,  your  cottons  and  woolens,  and 
sell  alongside  of  our  producers  in  our  markets,  we  will  make  your 


TARIFF  FOR   PROSPERITY   ONLY.  137 

product  bear  a  duty ;  in  effect,  pay  for  the  privilege  of  doing  it. 
Our  kind  of  a  tariff  makes  the  competing  foreign  article  carry  the 
burden,  draw  the  load,  supply  the  revenue ;  and  in  performing  this 
essential  office  it  encourages  at  the  same  time  our  own  industries 
and  protects  our  own  people  in  their  chosen  employments.  That  is 
the  mission  and  purpose  of  a  protective  tariff.  That  is  what  we  mean 
to  maintain,  and  any  measure  which  will  destroy  it  we  shall  firmly 
resist,  and  if  beaten  on  this  floor  we  will  appeal  from  your  decision 
to  the  people,  before  whom  parties  and  policies  must  at  last  be  tried. 
We  have  free  trade  among  ourselves  throughout  thirty-eight  states 
and  the  territories  and  among  sixty  millions  of  people.  Absolute 
freedom  of  exchange  within  our  own  borders  and  among  our  own 
citizens  is  the  law  of  the  Republic.  Reasonable  taxation  and  re- 
straint upon  those  without  is  the  dictate  of  enlightened  patriotism 
and  the  doctrine  of  the  Republican  party." 

Free-traders,  both  foreign  and  domestic,  seem  to  assume 
that  the  human  race  is  one  happy  family,  and  that  each  nation 
should  share  its  peculiar  advantages  and  surplus  production  with 
every  other  nation.  They  appear  to  think  this  is  the  natural 
right  of  the  latter,  but  they  do  not  extend  this  style  of  reasoning 
to  other  concerns  of  life.  They  do  not  seem  to  see  that  our 
markets  are  a  part  of  our  natural  rights  which  have  been  built  up 
by  the  people,  just  as  much  as  a  piece  of  property  belonging  to 
any  one  is  his  peculiar  right ;  or,  to  make  the  illustration  clearer, 
as  much  as  a  share  or  number  of  shares  of  stock  in  a  corporation 
is  the  property  of  the  person  who  purchases  or  obtains  them 
for  some  valuable  consideration.  No  one  of  common  sense 
and  discretion  would  think  of  asking  that  person  for  a  part  of 
those  securities  without  paying  for  them ;  and  the  United  States 
citizen  has  just  as  vital  and  solid  interest  in  the  markets  which 
he  and  perhaps  some  of  his  forefathers  have  assisted  to  build 
up,  while  the  free-trade  foreigners  with  the  aid  of  our  own  free- 
traders were  trying  hard  to  pull  them  down,  as  the  holder  in 
the  supposed  case  has  in  his  corporation  securities.  The  only 
difference  is  that  the  law  of  the  land  does  not  always  recognize 
property  in  general  markets,  yet  the  claim  of  the  citizen  is  as 
equitable  from  the  standpoint  of  natural  justice  in  the  one  case 
as  in  the  other,  and  that  is  one  of  the  strongest  reasons 


138         THE  WALL   STREET   POINT   OF  VIEW. 

why  we  want  a  statute  law  that  will  recognize  our  equitable 
claim. 

If  it  is  asked  why  the  consumer  does  not  pay  the  full  amount 
of  the  tariff,  it  is  easy  to  point  out  that  the  sharp  competition, 
both  foreign  and  domestic,  has  a  tendency  to  keep  prices  down, 
while  in  the  case  of  the  non-protected  article,  there  is  no  com- 
petition, and  the  seller  as  a  matter  of  course  takes  full  advan- 
tage of  the  demand.  The  consumer  and  foreign  producer  pay 
the  tariff  between  them. 

The  doctrine  of  the  Cobden  Club  is  just  the  reverse  of 
our  tariff  principle.  Their  rule  is  to  tax  no  foreign  product 
whose  like  is  a  home  product.  Our  protective  principle  is  to 
tax  every  product  whose  like  is  a  home  product,  and  to  put 
those  we  do  not  produce  on  the  free  list.  It  is  very  well  for  a 
nation  to  take  the  Cobden  attitude  when  it  is  not  self-supporting 
in  the  prime  necessities  of  life,  and  when  it  is  to  its  great  advan- 
tage to  have  all  the  ports  of  the  world  open  to  it ;  but  even 
England  does  not  carry  out  the  Cobden  free-trade  idea  in  toto. 

The  ad  valorem  system  has  been  done  away  with  as  far  as 
possible  in  the  new  Dingley  Tariff  Bill,  and  the  specific  system 
has  been  adopted  wherever  it  was  practicable.  The  ad  valorem 
system  is  based  upon  value,  the  other  upon  quantity.  The 
one  is  based  upon  the  foreign  valuation,  difficult  of  ascertain- 
ment and  resting  in  the  judgment  of  experts,  whose  interests 
are  usually  on  the  side  of  undervaluation ;  the  other  rests  upon 
quantity,  fixed  and  well-known  the  world  over,  always  deter- 
minable  and  always  uniform.  The  one  is  assessed  by  the 
yard-stick,  the  ton,  and  the  pound  weight  of  commerce,  and 
the  other  is  assessed  by  the  foreign  valuation  fixed  by  the 
foreign  importer  or  his  agent  in  New  York  or  elsewhere,  fixed 
by  the  producer,  fixed  by  anybody,  at  any  price,  to  escape  the 
payment  of  full  duties.  The  valuation  under  the  ad  valorem 
system  is  not  even  uniform  throughout  the  United  States,  for 
the  valuations  fixed  upon  imported  goods  at  the  port  of  Boston 
are  often  different  from  the  valuations  fixed  on  the  same  class 
of  goods  arriving  in  New  York,  Philadelphia,  San  Francisco,  or 
Charleston. 


TARIFF   FOR  PROSPERITY   ONLY.  139 

So  we  do  not  have  and  cannot  have  a  uniform  value,  for  the 
value  is  subject  always  to  the  cupidity  or  dishonesty  of  the  for- 
eign importer  or  producer.  It  is  a  system  that  has  been  con- 
demned by  all  the  leading  nations  of  the  world,  for  the  reason 
that  there  can  be  no  honest  administration  of  the  revenue  laws 
so  long  as  the  value  is  fixed  thousands  of  miles  away  from  the 
point  of  production  and  impossible  of  verification  at  home. 
Henry  Clay  said  fifty  years  ago :  "  Let  me  fix  the  value  of 
the  foreign  merchandise,  and  I  do  not  care  what  your  duty 
is." 

The  "  home  market "  is  another  object  of  disapproval  on  the 
part  of  the  free-trader.  He  wants  it  abolished,  and  this  with 
the  knowledge  that  it  absorbs  more  than  nine  tenths  of  our 
own  products.  He  wants  us  to  go  outside  and  hunt  for  new 
markets,  in  competition  with  nations  who  can  procure  labor  for 
as  much  per  week,  and  in  some  instances  per  month,  as  we  pay 
by  the  day.  How  would  the  country  get  along  without  the  home 
market  of  New  England,  for  instance?  The  New  England 
states  purchase  about  $200,000,000  worth  annually  of  prod- 
ucts from  the  northwest,  middle,  and  Pacific  sections.  It 
would  be  foolish  to  give  up  such  a  profitable  market  as  this 
to  go  in  search  of  another  in  some  foreign  country.  Yet 
that  is  virtually  what  free-traders  ask  us  to  do,  although  we 
have  competition  to  face,  no  matter  which  way  we  turn.  Even 
in  our  great  staple,  wheat,  competition  is  becoming  exceedingly 
sharp.  India,  for  example,  which  about  a  dozen  years  ago 
shipped  only  about  50,000  bushels,  is  now  shipping  more  than 
50,000,000  annually ;  and  India  can  put  wheat  down  in  the 
markets  of  Europe,  counting  both  cost  of  production  and  car- 
riage, about  as  cheaply  as  we  can  transport  it  to  the  markets 
abroad,  without  calculating  the  cost  of  production.  Of  course 
that  country  is  now  handicapped  in  exports  through  the  recent 
famine,  but  this  is  only  temporarily.  Just  think  of  it,  the 
transportation  of  wheat  is  as  heavy  an  item  to  our  formers  as 
the  whole  cost  of  raising  and  transportation  is  to  the  farmers 
of  India  !  This  would  seem  impossible,  but  a  prominent  mem- 
ber of  the  House  of  Representatives,  Mr.  Dunn,  is  responsible 


140         THE   WALL   STREET   POINT   OF  VIEW. 

for  the  figures ;  and,  if  they  are  correct,  competition  in  wheat 
is  certainly  out  of  the  question. 

I  learn  from  another  source  that  agricultural  wages  in  India 
range  from  $20  to  $25  a  year.  This  would  be  but  a  moderate 
rate  per  month  for  a  farm  laborer  in  the  United  States,  where 
the  average,  I  believe,  is  about  #25.  Yet  we  find  some  free- 
traders who  seem  to  be  under  the  delusion  that  wages  are  as 
high  abroad  as  they  are  here.  Mr.  William  Barbour,  of  the  Flax 
Spinning  Company,  Paterson,  New  Jersey,  who  has  also  a  flax 
mill  at  Lisburn,  Ireland  —  the  number  of  hands  in  the  Irish 
mill  being  2900  and  in  the  New  Jersey  mill  1400  —  says  that  the 
total  pay  roll  is  pretty  nearly  the  same  in  both  establishments, 
which  makes  the  wages  here  more  than  double.  The  German 
laborer  gets  from  47  to  70  cents  per  day,  and  for  skilled  labor 
80  to  92  cents.  In  England  the  wages  paid  for  agricultural 
labor  is  about  $12.65  Per  month.  In  British  India  the  wages  of 
men  is  6  cents  per  day,  and  i£  cents  for  women.  In  Kurnel  the 
highest  permanent  wages  are  50  cents  per  month.  In  Bom- 
bay and  Madras  laborers  are  paid  from  6  to  1 2  cents  per  day. 

So  these  are  some  of  the  rates  against  which  we  should  have 
to  seek  new  markets  for  our  grain  if  the  free- trade  doctrine 
should  prevail. 

When  the  free-trader  is  driven  from  most  of  his  strongholds 
in  argument,  he  takes  refuge  in  that  of  cheap  clothing.  A 
laughable  incident  occurred  a  few  years  ago  in  Congress  illus- 
trating this  point.  Major  McKinley  played  the  comedy  part 
with  serious  effect,  and  an  honorable  member  of  the  House, 
who  was  also  the  head  of  a  prominent  clothing  establishment 
in  Boston,  furnished  the  chief  butt  for  the  ridicule,  in  company 
with  Mr.  Mills  of  Texas.  Major  McKinley  was  arguing  that  the 
subject  of  cheaper  clothing  so  much  talked  about  was  not  broad 
enough  for  a  national  issue,  and  that  there  was  more  talk  than 
reality  about  it.  This  was  the  whole  scene  as  reported  verbatim 
in  the  Congressional  Record.  Major  McKinley  was  saying :  — 

"  I  represent  a  district  comprising  some  200,000  people,  a  large 
majority  of  the  voters  in  the  district  being  workingmen.  I  have  repre- 
sented them  for  a  good  many  years,  and  I  have  never  had  a  complaint 


TARIFF   FOR  PROSPERITY   ONLY.  141 

from  one  of  them,  that  their  clothes  were  too  high.  Have  you  ? 
[Applause.]  Has  any  gentleman  on  this  floor  met  any  such  com- 
plaint in  his  district  ? 

"  MR.  MORSE  (of  Massachusetts) .    They  did  not  buy  them  of  me. 

"  MR.  McKiNLEY.  No  !  Let  us  see ;  if  they  had  bought  of  the 
gentleman  from  Massachusetts  it  would  have  made  no  difference, 
and  there  could  have  been  no  complaint.  Let  us  examine  the 
matter.  ' 

"  [Mr.  McKinley  here  produced  a  bundle  containing  a  suit  of 
clothes,  which  he  opened  and  displayed  amidst  great  laughter  and 
applause.] 

"  Come,  now,  will  the  gentleman  from  Massachusetts  know  his 
own  goods  ?  [Renewed  laughter.]  We  recall  that  the  chairman 
of  the  Committee  on  Ways  and  Means  [Mr.  Mills  of  Texas]  talked 
about  the  laboring  man  who  worked  for  ten  days  at  a  dollar  a  day, 
and  then  went  with  his  ten  dollars'  wages  to  buy  a  suit  of  clothes. 
It  is  the  old  story.  It  is  found  in  the  works  of  Adam  Smith. 
[Laughter  and  applause.]  I  have  heard  it  in  this  House  for  ten 
years  past.  It  has  served  many  a  free-trader.  It  is  the  old  story, 
I  repeat,  of  the  man  who  gets  a  dollar  a  day  for  his  wages,  and  hav- 
ing worked  for  the  ten  days  goes  to  buy  his  suit  of  clothes.  He 
believes  he  can  buy  it  for  just  $10;  but  "the  robber  manufacturers" 
have  been  to  Congress,  and  have  got  100  per  cent,  put  upon  the 
goods  in  the  shape  of  a  tariff,  and  the  suit  of  clothes  he  finds  can- 
not be  bought  for  $10,  but  he  is  asked  $20  for  it,  and  so  he  has  got 
to  go  back  to  ten  days  more  of  sweat,  ten  days  more  of  toil,  ten 
days  more  of  wear  and  tear  of  muscle  and  brain  to  earn  the  $10  to 
purchase  the  suit  of  clothes.  Then  the  chairman  gravely  asks,  Are 
not  these  ten  days  entirely  annihilated  ? 

"Now,  a  gentleman  who  read  that  speech  or  heard  it  was  so 
touched  by  the  pathetic  story  that  he  looked  into  it  and  sent  me  a 
suit  of  clothes  identical  with  that  described  by  the  gentleman  from 
Texas,  and  he  sends  me  also  the  bill  for  it,  and  here  is  the  entire 
suit,  "  robber  tariffs  and  taxes  and  all "  have  been  added,  and  the 
retail  cost  is  what  ?  Just  $10.  [Laughter  and  applause.]  So  the 
poor  fellow  does  not  have  to  go  back  to  work  ten  days  more  to  get 
that  suit  of  clothes.  He  takes  the  suit  with  him  and  pays  for  it 
just  $10.  [Applause.] 

"  But  in  order  that  there  might  be  no  mistake  about  it,  knowing 
the  honor  and  honesty  of  the  gentleman  from  Massachusetts  [Mr. 
Morse],  he  went  to  his  store  and  bought  the  suit.  [Laughter  and 
cheers.]  I  hold  in  my  hand  the  bill. 


142          THE   WALL   STREET   POINT   OF   VIEW. 

"MR.  STRUBLE  (of  Iowa).     Read  it. 

"  MR.  McKiNLEY  (reading)  :  — 

" '  BOSTON,  MAY  4, 1888. 

utj-  D.  Williams,  bought  of  Leopold  Morse  &  Co.;  Men's, 
Youths1,  and  Boys' clothing ;  131  to  137  Washington  street,  corner 
of  Brattle.  To  one  suit  of  woolen  clothes,  $10.  Paid.' 

"  [Renewed  laughter  and  applause.] 

"  I  never  knew  of  a  gentleman  engaged  in  this  business  who  sold 
his  clothes  without  a  profit.  [Laughter.]  And  there  is  the  same 
$10  suit  described  by  the  gentleman  from  Texas  that  can  be  bought 
in  the  city  of  Boston,  can  be  bought  in  Philadelphia,  in  New  York, 
in  Chicago,  in  Pittsburg,  anywhere  throughout  the  country  at  $10 
retail  the  whole  suit,  coat,  trousers,  and  vest,  and  at  40  per  cent,  less 
than  it  could  have  been  bought  for  in  1860  under  your  low  tariff  and 
low  wages  of  that  period.  [Great  applause.]  It  is  a  pity  to  destroy 
the  sad  picture  of  the  gentleman  from  Texas  which  was  to  be  used 
in  the  campaign,  but  the  truth  must  be  told.  But  do  you  know  that 
if  it  was  not  for  protection  you  would  pay  a  great  deal  more  for  these 
clothes?" 

The  bewildering  inconsistency  of  some  of  the  items  in  the 
Wilson  Law  bordered  on  the  sublime  of  effrontery.  For  in- 
stance, while  it  taxed  the  farmer  on  almost  everything  he  has 
to  buy,  it  put  one  of  his  best  paying  staples,  wool,  on  the  free 
list,  thus  at  the  same  time  depriving  the  country  of  the  means 
of  making  good  cheap  home-made  clothing,  turning  the 
market  over  to  the  foreigner,  and  also  depriving  the  people  of 
cheap  mutton.  Cheap  mutton  is  a  great  boon,  especially  when 
the  "  Beef  Trust "  raises  prices.  Mutton  at  such  times  has 
usually  been  advanced  in  price  only  very  slightly  as  compared 
with  other  provisions. 

The  restoration  of  wool  to  the  farmer  is  another  good  point 
in  the  Dingley  Bill,  which  is  substantially  a  restoration  of  the 
McKinley  statute,  and  it  has  thus  far  been  largely  instrumental 
in  reviving  a  state  of  business  and  industrial  prosperity  such  as 
that  enjoyed  under  the  free  operation  of  the  McKinley  Law, 
especially  during  the  last  year  of  the  Harrison  administration. 

It  was  rather  amusing  to  witness  the  ostensible  surprise  (for 
it  would  be  an  insult  to  their  judgment  to  call  it  real)  of  cer- 


TARIFF   FOR   PROSPERITY   ONLY.  143 

tain  of  the  free-trade  and  low-tariff  newspapers  at  the  high 
tariff  of  the  Dingley  Bill.  Certain  of  these  exponents  of  public 
opinion  pretended  that  they  imagined  the  changes,  if  any,  were 
going  to  be  on  the  lines  of  the  Wilson-Gorman  Law.  Now 
this  is  a  confession  that  these  organs  know  less  than  the  rank 
and  file  of  the  voters  whom  they  propose  to  instruct.  Did  not 
a  large  majority  of  the  latter  state  emphatically,  at  the  polls, 
that  they  had  had  enough  of  the  Wilson  Bill  and  all  similar 
enactments  ?  and  by  the  same  silent  expression  did  they  not 
demand  the  higher  tariff  that  would  protect  labor  and  the  in- 
dustries upon  which  labor  has  to  depend  for  sustenance  ?  It 
was  the  plain  duty  of  Congress  to  proceed,  as  the  servants  of 
the  sovereign  voters,  to  formulate  this  expression  of  the  latter 
into  a  bill,  which  they  did,  and  for  the  same  reason  it  became 
the  executive  duty  of  the  President  to  sign  that  bill,  making  it 
a  law,  if  it  were  to  his  mind  in  harmony  with  the  will  of  the 
people  who  elected  both  him  and  Congress  to  do  this  work. 

Some  of  these  very  newspapers  referred  to  strongly  advo- 
cated the  election  of  the  McKinley  ticket,  knowing  that  in  the 
platform  of  the  Republican  party  there  was  a  plank  promising 
"  the  most  ample  protection  for  wool,  the  product  of  the  great 
industry  of  sheep  raising,  as  well  as  for  the  finished  woolens  of 
the  mill " ;  and  then  the  same  newspapers  turned  around, 
because  the  Republican  Congressmen  proposed,  very  unlike 
free-trade  politicians,  to  fulfil  their  promises  as  laid  down  in 
the  platform  on  which  they  were  elected.  The  only  ques- 
tion about  the  wool  schedule  was  the  real  meaning  of  "  most 
ample  protection"  in  the  platform.  Though  the  phrase  is 
somewhat  vague,  perhaps  designedly  so,  yet  it  is  manifest  that 
it  cannot  mean  any  less  protection  by  the  Dingley  Law  than 
that  afforded  by  the  McKinley  Law.  The  people  wanted  it, 
and  they  were  bound  to  have  it. 

With  all  the  free-trade  complaints  about  high-tariff  taxation, 
the  foreigners  have  managed,  even  under  the  Dingley  Law,  to 
send  us  as  much  stuff  of  the  kind  easily  produced  here  as 
would  give  profitable  employment  to  half  a  million  of  men  on 
this  side.  From  these  data,  it  can  be  faintly  imagined  what 


144         THE   WALL  STREET   POINT  OF  VIEW. 

the  condition  of  enforced  idleness  would  be  to  a  few  millions  of 
oar  wage  earners  under  a  full  free-trade  enactment,  with  the 
contraction  of  and  loss  to  capital  which  that  would  imply. 

In  order  to  prove  that  this  state  of  things  is  no  fancy  picture, 
that  my  inferences  are  reasonable,  and  that  the  unfortunate 
history  of  distress  and  business  stagnation  is  liable  to  repeat 
itself  under  either  free- trade  or  very  low-tariff  principles,  I  here- 
with present  the  opinions  and  testimony  of  two  of  the  most 
reliable  witnesses  on  this  subject,  namely,  Grover  Cleveland 
and  James  Buchanan. 

In  Buchanan's  message  of  December,  1857,  a  year  after  his 
election  and  thirty-six  years  before  the  election  of  Mr.  Cleve- 
land, the  following  language  was  used :  — 

-  The  earth  has  yielded  her  fruits  abundantly ;  our  great  staples 
command  high  prices,  and  up  till  within  a  brief  period  our  mineral, 
manufacturing,  and  mechanical  occupations  have  largely  partaken  of 
the  general  prosperity.      We  have  possessed  all  the  elements  of 
material  wealth  in  rich  abundance,  yet  notwithstanding  these  ad- 
vantages, our  country  in  its  monetary  interests  is  at  present  in  a 
deplorable  condition. 

••  In  the  midst  of  unsurpassed  plenty  we  find  oar  manufactures  sus- 
pended, our  public  works  retarded,  our  private  enterprises  abandoned, 
and  thousands  of  useful  laborers  thrown  out  of  employment  and  re- 
duced to  want.  Under  these  circumstances  a  loan  may  be  required 
before  the  dose  of  your  present  session,  but  this,  although  deeply  to 
be  regretted,  would  prove  to  be  only  a  slight  misfortune  when  com- 
pared with  the  suffering  and  distress  prevailing  among  our  people." 

In  President  Cleveland's  message  of  August,  1893,  ten 
months  after  his  election,  this  emphatic  language  descriptive 
of  the  business  and  industrial  situation  was  used :  — 

-  With  plenteous  crops,  with  abundant  promise  of  remunerative 
production  and  manufacture,  with  unusual  invitation  to  safe  invest- 
ment, and  with  satisfactory  assurance  to  business  enterprise,  sud- 
denly financial  distrust  and  fear  have  sprung  up  on  every  side. 

-  Numerous  moneyed  institutions  have  suspended,  because  abun- 
dant assets  were  not  immediately  available  to  meet  the  demands  of 
frightened  depositors.     Surviving  corporations  and  individuals  are 


TARIFF  FOR  PROSPERITY   ONLY.  145 

content  to  keep  in  hand  the  money  they  are  usually  anxious  to  loan, 
and  those  engaged  in  legitimate  business  are  surprised  to  find  that 
securities  they  offer  for  loans,  though  heretofore  satisfactory,  are  no 
longer  accepted. 

"  Values  supposed  to  be  fixed  are  fast  becoming  conjectural,  and 
loss  and  failure  have  involved  every  branch  of  business." 

The  periods  at  which  these  similar  conditions  are  described 
in  similar  terms  were  thirty-six  years  apart,  but  in  each  instance 
the  free-trade  mania  was  the  ruling  passion  of  the  leaders  of 
the  party  in  power. 

Who  can  resist  the  inference  that  these  similarly  deplorable 
conditions  of  the  country,  so  graphically  described  by  both 
Presidents,  originated  to  a  large  extent  in  the  free-trade  heresy? 


CHAPTER  XX. 
OUR  FOREIGN  TRADE  AND  FREE  TRADE. 

The  immense  showing  of  our  foreign  trade  for  the  fiscal  year  ending 
June  30,  1898.  —  Our  balance  of  trade  far  ahead  of  that  of  other 
years  and  twice  the  amount  of  any  previous  record. — This  has  been 
achieved  under  a  protective  tariff  which  free-traders  thought  was  going 
to  ruin  the  country.  —  How  it  tallies  with  the  free-trade  doctrine  of 
the  Cobden  Club  and  that  of  its  representatives  in  this  country.  —  The 
immense  increase  in  the  exports  of  our  manufactured  goods.  —  Our 
wealth  increases  as  our  imports  diminish  and  as  our  exports  increase.  — 
We  saved  in  1898,  by  the  much  maligned  protective  tariff,  an  amount  of 
money  greater  by  half  a  billion  than  the  national  debt  at  the  close  of 
the  Civil  War. — The  greatest  profitable  import  to  us  was  gold,  of  which 
we  had  a  balance  of  $105,000,000  for  the  year. 

IF  anything  were  wanting  to  illustrate  the  great  advantages 
of  protective  tariff  legislation  over  that  for  "  revenue  only," 
—  which  failed  sadly  in  affording  sufficient  revenue,  —  the  his- 
tory of  the  United  States  commerce  for  the  fiscal  year  ending 
June  30,  1898,  would  amply  supply  that  evidence. 

The  exports  of  merchandise  for  this  period  amounted  to 
11,231,311,868.  This  exceeded  the  exports  of  the  previous 
fiscal  year  by  $180,318,312,  and  the  exports  of  1892  by  $201,- 
000,000.  The  excess  of  exports  over  imports,  or  the  balance 
of  trade  in  our  favor,  amounted  to  $615,259,024,  or  more  than 
twice  the  amount  ever  before  recorded  in  our  commercial  his- 
tory. 

In  the  fiscal  year  in  question  we  sold  about  two  dollars'  worth 
for  every  dollar's  worth  we  bought,  and  our  growing  prosperity 
is  manifested  very  clearly  through  this  operation.  According 
to  the  ideas  of  free-traders  of  the  Cobden  Club,  such  a  bal- 
ance in  our  favor  would  indicate  that  the  country  was  on  the 

146 


OUR  FOREIGN  TRADE  AND  FREE  TRADE.  147 

way  to  national  ruin ;  but  it  is  difficult  to  understand  this  theory, 
so  far  as  we  are  concerned,  when  the  contrary  reasoning  gives 
us  such  a  large  balance  on  the  other  side  of  the  ocean,  and 
makes  us  to  this  extent  a  creditor  nation.  Such  a  financial 
position  can  hardly  be  regarded  as  a  sign  of  national  decay.  Our 
wealth  increases  as  our  imports  diminish,  which  is  in  direct 
contravention  of  the  arithmetic  of  the  Cobden  Club.  The 
total  imports  for  the  fiscal  year  amount  to  only  $616,052,844, 
against  $764,730,412  for  the  previous  year.  Our  merchandise 
imports  were  the  smallest  since  1885.  They  fell  $148,677,568 
short  of  the  aggregate  for  1897,  and  $250,000,000  below  that 
of  1893. 

It  has  been  computed  by  expert  statisticians,  one  of  whom 
is  Bradstreet's,  that  the  centennial  year  of  1876  was  the  turning- 
point  when  the  balance  began  in  our  favor.  Prior  to  that  time, 
during  eighty-five  years  from  1791,  the  balance  had  been  gen- 
erally against  us,  the  aggregate  excess  of  imports  over  exports 
for  the  period  having  amounted  to  no  less  than  $2,215,404,610. 
During  the  twenty-three  years  since  the  centennial  year  the  ag- 
gregate excess  of  exports  over  imports  had  been  $3,191,268,300, 
or  an  amount  greater  by  $510,620,431  than  our  national  debt 
at  the  close  of  the  Civil  War,  in  1865. 

It  is  worthy  of  note  that  during  the  latter  period,  which 
shows  such  a  large  balance  in  our  favor,  the  advocates  of  a 
protective  tariff  have  been  always  gaining  ground,  with  the 
exception  of  an  occasional  repulse  from  which  they  soon  recov- 
ered, until  they  achieved  a  final  triumph  in  the  passage  of  the 
Dingley  Bill. 

If  free-traders  had  had  their  own  way  during  the  past  twenty- 
three  years,  this  immense  balance  of  more  than  $3,000,000,000, 
about  three  fourths  as  much  as  all  the  gold  above  ground  at 
present,  and  more  than  one  fourth  as  much  as  the  money  of 
every  description  now  existing,  instead  of  having  been  spent  in 
this  country,  would  have  gone  to  be  spent  in  other  countries, 
thus  enriching  them  at  our  expense.  If  we  had  only  had 
protection  enough  to  retain  those  two  odd  billions  which  we 
lost  through  free  trade  in  the  first  period  of  eighty-five  years, 


148         THE  WALL   STREET   POINT  OF  VIEW. 

we  would  now  have,  by  actual  trade  calculation,  about  half  the 
amount  of  all  the  money  in  the  world. 

Though  the  fiscal  year  ending  June  30,  1898,  was  the  most 
prosperous  in  the  history  of  our  commerce,  and  of  our  financial 
relations  with  other  nations,  the  proportion  of  our  agricultural 
exports  was  not  so  large  as  in  some  former  years.  They  were 
only  71  per  cent,  of  the  total,  whereas  in  r&g4  they  were  72 ; 
in  1893  they  were  74;  in  1892  they  were  78;  in  1881  they 
were  82  ;  and  in  1880  they  exceeded  83.  The  exports  of  our 
manufactured  goods,  however,  far  more  than  made  up  the  defi- 
ciency. They  amounted  to  almost  the  unprecedented  sum  of 
$300,000,000,  whereas  they  never  before  this  time  rose  to  more 
than  $100,000,000. 

The  increase  in  the  total  exports  of  merchandise  for  the 
previous  ten  years  amounts  to  nearly  100  per  cent. ;  and  yet 
some  people,  and  among  them  many  who  were  born  here,  pre- 
tend to  think  that  this  country  has  been  decreasing  in  prosper- 
ity, and  that  it  has  seen  its  best  days. 

These  exports  of  our  manufactures,  under  a  protective  tariff, 
have  been  made  to  all  parts  of  the  globe,  thus  showing  that, 
in  order  to  extend  our  markets  for  manufactured  articles,  a 
free-trade  policy  on  the  part  of  our  government  is  not  abso- 
lutely necessary.  The  free-trade  assumption  has  never  been 
so  practically  answered  as  by  the  figures  above  quoted. 

It  will  be  remembered  that  after  the  passage  of  the  Dingley 
Bill  there  was  some  disquieting  talk  in  free- trade  circles  regard- 
ing the  way  our  trade  was  going  to  be  menaced  by  retaliation 
instead  of  reciprocity,  especially  by  Germany,  France,  and 
Great  Britain.  The  first,  however,  showed  her  spirit  of  retalia- 
tion in  a  friendly  and  appreciative  manner  by  increasing  her 
bill  of  goods  from  $50,000,000  in  1897  to  $150,000,000  in 
1898;  the  second  by  increasing  hers  from  $40,000,000  to 
$100,000,000;  and  the  third,  our  greatest  competitor,  by  in- 
creasing hers  from  $362,000,000  to  $540,000,000.  Even  Dark- 
est Africa  made  an  increase  from  $3,000,000  to  $17,000,000. 
Japan  increased  her  order  from  $4,000,000  to  $21,000,000, 
and  China  her  quota  from  $4,500,000  to  $10,000,000, 


OUR  FOREIGN  TRADE  AND  FREE  TRADE.  149 

while  Austro-Hungary,  which  had  taken  only  $500,000,  in 
1897-98  raised  her  demand  to  $5,000,000.  Belgium  rose 
from  $10,000,000  to  $47,000,000,  Denmark  from  $3,000,000 
to  $12,000,000,  and  the  Netherlands  jumped  from  $16,000,000 
to  $65,000,000. 

There  is  nothing  more  agreeable  in  reviewing  the  list  of 
these  increases  than  to  reflect  upon  the  curious  action  of  Great 
Britain,  who  had  been  preparing  to  wreak  her  retaliative  ven- 
geance upon  us,  on  account  of  the  tariff  laws.  Instead  of  pur- 
suing this  inimical  policy,  she  turned  around,  and,  in  a  truly 
Christian  spirit,  even  before  the  sun  had  gone  down  upon  her 
wrath,  nearly  doubled  her  former  large  order.  Such  enemies 
in  commerce  are  our  truest  friends. 

Another  large  item  of  prosperity  is  shown  in  the  commercial 
status  of  gold.  The  excess  of  imports  in  that  precious  article 
came  within  $51,000  of  being  $100,000,000,  and  if  we  count 
$5,000,000  of  gold  ore,  an  addition  of  $105,000,000  will  appear 
to  our  balance  of  trade  credit.  When  to  this  amount  $60,000,000 
from  our  gold  mines  is  added,  we  need  have  no  dread  of  gold 
shipments,  which  have  so  frequently  been  the  scare  of  the 
stock  market,  and  have  often  created  a  nervous  feeling  in 
financial  circles  generally. 

Now,  we  may  safely  arrive  at  the  conclusion  that  in  order 
to  increase  our  prosperity  further  our  importations  may  be 
limited  very  considerably.  The  most  important  of  these  is 
gold,  and  the  others  are  classified  in  that  part  of  the  tariff 
schedule  which  includes  all  articles  of  necessity  which  we  do 
not  manufacture  ourselves,  most  of  which  are  on  the  free 
list. 

The  wealthy  are  also  free  to  enjoy  the  foreign  luxuries  that 
they  may  fancy  by  paying  the  tariff,  though  that  is  in  every 
instance  so  much  loss  to  our  own  country.  There  is  no  law 
against  bestowing  benefits  and  free  gifts  personally  upon  for- 
eigners, and  this  may  be  looked  upon  to  some  extent  as 
reciprocity.  We  owe  some  of  our  great  institutions  of  learning 
to  the  free  gifts  of  foreigners,  but  though  we  may  owe  them 
much,  yet  we  would  be  overpaying  our  indebtedness  to  make 


150         THE   WALL   STREET   POINT   OF   VIEW. 

a  present  of  our  industries  to  them,  the  greatest  source  of 
our  wealth  and  increasing  prosperity. 

It  is  superfluous  to  multiply  arguments  on  the  national  wis- 
dom of  the  policy  of  protection.  The  foregoing  figures,  dem- 
onstrating our  great  prosperity  as  the  result  of  that  policy  are 
sufficient,  and  this  report  of  our  foreign  trade  by  the  Bureau 
of  Statistics  amply  justifies  the  policy  of  a  tariff  for  the  protec- 
tion of  our  industries,  artisans,  and  laborers,  as  well  as  for  gov- 
ernment revenue,  and  not  for  revenue  only. 

Statistics  of  our  foreign  trade  in  the  fiscal  year  ending  June 
30,  1899,  show  a  favorable  balance  of  trade,  not  so  large  as  in 
the  former  year,  but  still  very  considerable.  In  compensation 
for  the  large  increase  in  our  imports  of  merchandise,  our  ex- 
ports of  manufactured  articles  show  an  increase  of  $50,000,000 
We  may  also  study  how  raw  material  contributes  to  this  end, 
and  compare  the  commercial  standing  of  other  nations  of  the 
world  with  our  own ;  we  may  also  reflect  upon  our  last  decade's 
surplus  prosperity,  our  great  pelagic  expansion  and  its  wonder- 
ful possibilities,  our  commercial  relations  to  other  nations,  and 
what  those  nations  think  of  us  in  these  respects. 

The  addendum  to  this  chapter  will  bring  up  the  statistical 
position  of  our  foreign  trade  to  the  end  of  the  fiscal  year  end- 
ing June  30,  1899.  The  comparative  exports  and  imports  for 
the  two  years  can  be  seen  at  a  glance,  thus :  — 

For  twelve  months  ended  June  30  :  — 


Merchandise  — 
Imports  —  Free  of  duty. 
Dutiable         . 

1899 
.       $300,251,333 
396,826,055 

1898 
$291,414,175 
324,635,479 

Total  
Exports  —  Domestic 

•       $697,077,388 
.    $1,204,370,305 
23,073,120 

$616,049,654 
$1,210,291,913 
21,190,417 

Total.        .        i,        .        .        . 

.    $1,227,443,425 

$1,231,482,330 
611;  ,432,676 

Gold  — 

$88,91:4,603 

Sl2O,7QI,674 

i  *,  4.06,  lo  i 

Excess  of  imports   .       •        .        . 

$5M32»5I7 

$104,985,283 

OUR  FOREIGN  TRADE  AND  FREE  TRADE.  151 


Silver  — 
Imports  . 
Exports  . 

Excess  of  exports 

Merchandise  — 
Month,  June. 


1899  1898 

$30,696,878  $30,027,781 

56,318,855  55,105,239 

$25,621,977  $24,077,458 


Imports  —  Free  of  duty  .... 
Dutiable         .... 

$25,881,331 
35,804,877 

$22,820,436 
28,344,795 

Total  

Exports  —  Domestic        .... 
Foreign  

$61,686,208 
$94,828,732 
I.995.4I3 

$51,165,231 

$93,012,297 
1,966,426 

Total  
Excess  of  exports    ..... 
Gold  — 
Imports  
Exports  

$96,824,145 
35.137.937 

$3,105,686 
20,908,327 

$94,978,723 
43,8i3»492 

$3»33°»6i2 
375,529 

$2.QCC  O83 

Excess  of  exports    ..... 
Silver  — 
Imports  
Exports  

$17,802,641 

$1,917,215 
3,843,099 

$2,028,803 
4,156,650 

Excess  of  exports    

$1,925,884 

$2,127,847 

These  figures  are  compiled  by  the  Bureau  of  Statistics  at 
Washington.  The  first,  and  most  attractive  item,  perhaps,  in 
this  table  is  our  balance  of  trade  or  excess  of  exports  over 
imports.  It  is  still  large,  namely,  $530,366,037,  though  fully 
$85,000,000  less  than  it  was  the  previous  year,  our  imports 
being  $81,000,000  more. 

There  are  items  which  partly  compensate  for  this  large 
increase  in  our  imports  of  merchandise.  Our  exports  of  manu- 
factured articles,  which  are  considered  separately  (and  not  yet 
returned),  will  show  an  increase  of  probably  $50,000,000  over 
those  of  1898.  Moreover,  the  increase  in  our  imports  is  largely 
of  raw  material  and  goods  that  we  do  not  produce  except  on  a 
small  scale.  Our  profits  through  the  raw  material  are  real- 
ized in  the  finished  articles  which  we  manufacture  from  this 
material,  and  export.  Our  decrease  in  crop  exports,  therefore, 


152         THE  WALL   STREET   POINT  OF  VIEW. 

is  considerably  offset  by  our  increase  in  the  exports  of  manu- 
factured articles. 

It  is  worthy  of  note  that,  in  the  calculation  of  this  question 
of  foreign  trade,  we  have  the  advantage  of  most  other  nations 
in  our  large  possession  of  raw  material  to  be  worked  up,  as 
well  as  the  material  which  furnishes  the  power  for  such  work- 
ing. Germany,  for  example,  one  of  the  most  enterprising  of 
our  manufacturing  competitors,  has  to  import  very  large  quan- 
tities of  her  raw  material  and  a  considerable  part  of  her 
coal. 

If,  in  this  comparison  of  the  increase  of  our  manufactures 
with  those  of  other  nations,  we  should  take  ten  years  instead  of 
two,  the  increase  for  that  period  would  probably  exceed  100 
per  cent.,  perhaps  no  or  more.  The  problem  of  our  foreign 
trade  would  become  still  more  interesting,  and  would  place  us 
in  a  position  where,  by  a  kind  of  inevitable  destiny,  we  should 
become  the  general  absorber  of  all  the  surplus  business  in  the 
world,  and  that  without  any  extraordinary  ambition  or  aspira- 
tions on  our  part  to  attain  the  distinguished  honor,  but  by 
necessity  of  our  position. 

Meanwhile  we  are  now  actually  doing,  through  the  medium 
of  a  protective  tariff,  paradoxical  as  it  may  seem,  what  our 
free-trade  friends  have  long  been  insisting  that  we  should  do 
under  their  tutelage,  —  capturing  the  world's  markets  in  defi- 
ance of  cheaper  labor  throughout  the  rest  of  the  globe.  Those 
ancient  centers  of  commercial  power  would  have  stood  aghast 
at  the  idea  of  such  an  achievement.  Who  knows  but  that  in 
the  future  we  may  become  not  only  the  center  of  financial 
power  and  attraction,  but  the  peaceful  arbitrator  of  political 
and  universal  harmony  among  the  nations,  when  peace  con- 
ventions shall  take  rank  as  historic  curiosities  in  the  annals 
of  a  fully  developed  Republic  of  the  World  ? 

In  the  language  of  Tennyson  :  — 

"  Not  in  vain  the  distance  beacons.     Forward,  forward  let  us  range. 
Let  the  great  world  spin  forever  down  the  ringing  grooves  of  change. 
Thro'  the  shadow  of  the  globe  we  sweep  into  the  younger  day ; 
Better  fifty  years  of  Europe  than  a  cycle  of  Cathay." 


OUR  FOREIGN  TRADE  AND  FREE  TRADE.  153 

Let  us  improve,  if  possible,  in  our  prosaic  way  on  the  Tenny- 
sonian  sentiment,  by  taking  for  the  periodic  times  of  our  evolu- 
tion, ten  years  each  of  America,  instead  of  fifty  years  of  Europe 
or  a  cycle  of  China. 

The  result  of  this  retrospect  of  a  decade  shows,  as  I  have 
just  stated,  that  our  increase  in  foreign  trade  has  exceeded  too 
per  cent.  How  has  it  been  during  the  same  period  with  other 
great  commercial  nations?  We  will  take  the  greatest  of  these, 
the  British,  for  the  purpose  of  comparison.  Let  us  hear  what 
Lord  Farrar  has  to  say  upon  the  subject.  At  a  recent  meeting 
of  the  British  Iron  Trade  Association,  this  eminent  authority, 
speaking  on  the  famous  subject  of  the  "open  door"  in  com- 
merce, said  :  — 

"  The  gist  of  the  case  put  before  me  is  that,  while  the  exports  of 
the  iron  and  steel  manufactures  of  Great  Britain  are  still  very  large, 
and  indeed  larger  than  those  of  any  other  country,  their  proportion 
to  similar  industries  in  other  countries,  especially  Belgium,  Germany, 
and  the  United  States,  is  much  less  than  it  was;  that  there  is  a 
large  and  increasing  import  of  foreign  iron  and  steel  into  the  United 
Kingdom,  and  that  foreign  countries  are  rivaling  us  in  neutral  mar- 
kets. From  these  facts  it  is  suggested  that  this  important  branch 
of  our  industry  may  be  in  danger  from  foreign  competition  ;  and  it 
is  whispered,  rather  than  suggested,  that  we  may  have  to  depart 
from  the  policy  of  the  '  open  door '  and  exclude  foreign  iron  and 
steel  goods  by  different  duties." 

Now,  while  this  is  a  thoughtful  expression  of  a  most  intel- 
ligent representative  of  one  of  the  most  favored  nations  in 
commerce,  some  of  our  free-trade  journals  are  attempting  to 
prove  that  a  nation  becomes  wealthier  in  proportion  to  the  con- 
tinued increase  of  its  imports  as  compared  with  its  exports. 

Let  us  see  what  that  great  authority  of  John  Bull,  the  London 
Iron  and  Coal  Trades'  Review,  has  to  say  on  the  subject. 

"In  1876  Great  Britain  was  exporting  to  the  United  States  from 
500,000  to  1,000,000  tons  of  iron  and  steel  annually,  and  probably 
the  last  thing  that  troubled  our  manufacturers  at  that  time  was  the 
reflection  that  the  United  States  could  ever  manufacture  those  com- 


154         THE   WALL   STREET   POINT  OF  VIEW. 

modities  so  cheaply  as  to  be  able  to  compete  against  themselves  in 
Europe  markets.  But  the  times  change.  We  have  lived  to  see  the 
day  when  it  is  not  the  getting  into  American  markets,  but  the  keep- 
ing of  Americans  out  of  our  own,  that  is  the  chief  source  of  anxiety." 

Now,  amid  a  host  of  general  conclusions  that  might  be  drawn 
from  the  premises  and  considerations  herein  enumerated, 
several  are  clearly  evident ;  one  is  that  our  country,  at  the  end 
of  the  century,  exhibits  the  greatest  developments  in  all  history, 
and,  again,  that  our  own  progress  has  been  a  thousand  times 
greater  in  all  respects  than  that  of  any  other  nation  either 
ancient  or  modern.  Who  can  venture  to  predict  what  our 
millennium  will  be? 

It  is  true,  this  comparison  savors  of  self-glorification,  but  it 
seems  thoroughly  warranted  by  events,  as  well  as  by  what  little 
we  can  divine  of  future  prospects. 


CHAPTER   XXI. 

RETROSPECTS  AND  PROSPECTS. 

Certain  comments  and  predictions  about  free-trade  legislation  and  an 
answer  to  charges  of  pessimism.  —  Analysis  of  past  legislation  in  its 
practical  outcome,  and  the  prospective  hopes  of  the  operation  of  the 
measure  now  gone  into  effect. 

STATEMENTS  have  been  made  by  certain  of  my  critics 
vj  that  I  have  been  pessimistic  on  questions  in  which  free- 
trade  theories  were  concerned. 

Such  an  opinion  does  not  do  me  full  justice.  On  the  con- 
trary, I  have  been  optimistic  regarding  future  prosperity.  I 
have,  for  instance,  been  of  opinion  that  the  country,  though 
seriously  handicapped  by  free-trade  theories  embodied  in  law, 
might  yet  rise  superior  to  them  and  grasp  prosperity,  though 
of  course  not  to  the  same  extent  as  under  a  judicious  measure, 
affording  protection  to  our  industries  and  to  the  wages  of  labor. 

I  am  on  record  as  having  given  free  expression  to  such 
opinions  on  various  occasions.  I  have  professed  only  the 
capacity  of  reasoning  regarding  the  future  from  observation  of 
the  past  and  present ;  a  power  which  most  people  of  ordinary 
intellect  and  education  may  possess  in  a  greater  or  less  degree, 
according  to  the  closeness  and  accuracy  of  their  observations. 

Napoleon  said,  "  labor  is  genius,"  and  it  was  a  familiar 
aphorism  of  the  old  Latin  writers  that  labor  could  conquer  and 
surmount  all  obstacles.  These  are  expressions  of  a  solid  truth 
in  an  exaggerated  form,  and  simply  serve  to  remind  us  of  the 
inherent  power  of  industry  both  mental  and  physical,  at  the 
same  time  affording  us  encouragement  under  apparent  defeat, 
and  showing  us  the  fatuity  of  relinquishing  hope  under  the 
most  discouraging  circumstances.  Most  of  this  world's  prog- 

'55 


156          THE  WALL   STREET   POINT   OF  VIEW. 

ress  is  dependent  upon  hope.  Impelled  by  laudable  feelings 
of  this  nature,  I  wrote  the  following  article,  for  instance,  in 
January,  1894,  at  the  request  of  the  proprietor  of  the  New 
York  World:  — 

"You  ask  my  opinion  as  to  the  prospects  of  business  for  1894. 
You  could  not  have  put  a  question  about  which  I  should  be  less 
disposed  to  be  prophetic.  There  is  not  much  difficulty,  perhaps,  in 
making  a  diagnosis  of  the  present  condition  of  the  patient,  but  if 
you  ask  me  what  is  to  be  the  course  of  his  recovery,  I  must  in 
return  ask  you,  What  are  going  to  be  the  factors  acting  upon  his 
enfeebled  system  during  the  process  of  convalescence  ? 

"We  all  know  that  the  trade,  the  industry,  and  the  finances 
of  the  country  were,  last  summer  and  autumn,  prostrated  to  a 
degree  beyond  all  former  experiences.  But  just  what  that  portends 
as  to  the  progress  and  the  date  of  recovery-  is  not  to  be  determined 
off-hand.  We  are  not  to  regard  the  panic  of  1893  as  one  of  the 
ordinary  kind.  It  was  not  caused  by  industrial  over-production,  nor 
by  financial  inflation,  such  as  comes,  for  instance,  out  of  over-issues 
of  securities  for  new  railroads  or  other  new  enterprises ;  nor  was 
it  caused  by  over  speculation  and  an  excessive  inflation  of  prices ; 
nor  by  war,  nor  by  sympathy  with  great  European  political  compli- 
cations. None  of  these  ordinary  causes  of  panic  had  anything  to 
do  with  the  great  crisis  of  last  year.  The  entire  business  of  the 
country  in  all  its  departments  of  production,  trading,  financing, 
and  credit  was,  as  a  rule,  in  a  perfectly  sound,  conservative,  and 
fairly  profitable  condition  when  the  tidal  wave  struck  us.  It  started 
and  it  progressed  to  its  culmination  under  a  sudden  fright,  lest  the 
excess  of  silver  introduced  into  our  currency  system  might  cause  a 
run  on  the  Treasury  gold  and  compel  a  general  suspension  of  gold 
payments,  the  fear  being  instigated  by  a  sudden  and  very  large 
export  of  gold.  This  blow  at  the  credit  of  the  government  became, 
in  its  rebound,  a  still  greater  blow  at  the  general  credit  system  of 
the  country  at  large.  Lending  at  banks  was  suspended,  and  busi- 
ness had  to  be  conducted  on  a  cash  basis,  while  sudden  liquidation 
became  universal,  and  failures  were  consequently  unprecedented  in 
number. 

"  There  was  here  surely  havoc  enough ;  never  so  much,  never 
so  cruel.  But  there  is  a  most  radical  difference  between  a  panic 
coming  upon  sound  conditions  and  one  precipitated  by  intrinsic 
rottenness ;  all  the  difference  that  there  is  between  an  accident  to 


RETROSPECTS  AND  PROSPECTS.       157 

a  man  in  vigorous  health  and  to  one  weakened  by  constitutional 
disease.  In  one  case,  nature  helps  by  a  self-curative  process ;  in  the 
other,  diseased  organic  conditions  aggravate  the  mischief  caused 
by  the  accident.  For  this  reason,  I  look  for  a  much  more  rapid 
recovery  from  the  effects  of  the  purely  monetary  causes  of  the  panic 
than  has  followed  our  previous  great  crises ;  and,  of  course,  the 
more  so  as  the  source  of  the  silver  alarm  has  been  removed  by 
Congress,  and  public  opinion  has  shown  its  resolute  soundness  on 
that  question. 

"  By  this  time,  we  should  have  witnessed  a  much  larger  measure 
of  recovery  than  has  actually  appeared,  had  it  not  been  for  the 
intervention  of  a  new  disturbance  of  confidence  arising  from  the 
introduction  of  measures  for  revolutionizing  the  commercial  policy 
of  the  country.  Without  caring  here  to  express  my  views  either  for 
or  against  the  policy  of  the  Administration  in  that  matter,  it  is  not 
to  be  denied  that  virtually  our  entire  manufacturing  industries 
earnestly  regard  the  proposed  large  reductions  of  duty  as  vitally 
threatening  their  business,  which  is  a  most  potential  factor  bearing 
on  confidence,  regarding  which  there  can  be  no  question  that  the 
interval  of  transition  from  the  old  conditions  to  the  new  could  not 
be  attended  with  anything  short  of  widespread  suspension  of  both 
manufacturing  and  trade ;  and,  as  a  matter  of  fact,  it  is  estimated 
by  competent  authorities  that  the  retail  business  of  the  country  is 
now  curtailed  to  the  extent  of  from  15  to  20  per  cent,  of  its  usual 
volume,  while  in  most  branches  of  manufacturing  the  contraction 
is  double  that  proportion. 

"  That  is  the  condition  of  affairs  now  patent  to  everybody's  eyes. 
It  is  so  alarming  that  many  cool-headed  men  even  are  scared  out  of 
all  exercise  of  cool  judgment,  and  ninety  men  out  of  every  hundred 
are  more  or  less  hopelessly  pessimistic  about  the  future.  I  confess 
that  I  am  unable  to  go  to  the  full  length  of  these  forebodings.  As 
a  young  country  of  marvelous  wealth  and  unequaled  powers  of 
recuperation,  we  are  capable  of  a  rapidity  of  convalescence  that  can 
be  matched  by  no  other  nation.  As  a  largely  self-dependent  coun- 
try, we  are  little  exposed  to  suffer  in  sympathy  with  the  causes  that 
have  prostrated  the  European  commercial  states  and  their  colonial 
dependencies  and  trade  connections.  Europe  is  vitally  dependent 
upon  us ;  we  can  afford  to  be  comparatively  independent  of  Europe. 
In  the  next  place,  we  have  none  of  the  debris  of  dry  rot  to  get  rid 
of.  The  equipments  of  our  industries  are  fresh,  complete,  up  to 
the  most  modern  improvements,  and  only  delayed  by  the  getting  up 
of  steam,  while  capital  is  waiting  in  immense  idle  hoards  to  apply 


158         THE  WALL   STREET   POINT  OF  VIEW. 

the  impelling  power,  and  the  banks  are  prepared  to  afford  as  much 
support  to  business  as  they  were  giving  on  the  eve  of  the  unsus- 
pected panic.  These  certainly  are  not  the  sort  of  conditions  that  are 
ordinarily  found  at  this  early  stage  after  an  ordinary  panic ;  and  for 
this,  among  other  reasons,  I  do  not  expect  recovery  in  this  case  to 
follow  the  pace  of  former  tardy  recoveries. 

"  The  most  stubborn  obstacle  that  now  remains  to  be  overcome 
is  the  suspension  of  business  until  the  new  tariff  duties  take  effect. 
Here,  also,  I  think  the  real  probabilities  are  underestimated  in  the 
present  gloomy  public  mood.  We  have  already  used  up  our  stocks 
of  merchandise  to  the  verge  of  absolute  exhaustion ;  our  imports 
are  declining  to  such  an  extent  that  the  December  arrivals  of  dry 
goods  at  New  York  were  only  one  third  of  those  of  a  year  ago. 
With  supplies  in  this  condition,  and  with  the  current  output  of 
manufactures  falling  behind  the  requirements  of  consumption,  it  is 
not  difficult  to  see  that  our  closed  factories  must  reopen  long  before 
the  new  tariff  goes  into  operation ;  and,  with  the  reduction  in  the 
prices  of  raw  materials  and  the  general  concessions  in  wages  that 
are  taking  place,  there  is  no  apparent  reason  why  moderate  profits 
should  not  be  made  upon  an  early  resumption  of  operations.  In 
proportion  as  work  is  resumed,  labor  will  be  better  employed ;  and 
the  better  employment  of  labor  will  extend  the  market  for  goods. 
Under  these  conditions,  the  way  seems  clear  to  a  gradual  revival 
of  business  and  a  steady  sliding  into  a  healthier  and  more  active 
condition  of  affairs.  Any  mere  mood  of  feeling  proves  to  be  a 
transient  sentiment  among  an  active  commercial  people,  and,  in 
this  case,  we  will  soon  recover  our  courage  and  cease  to  view  the 
situation  'through  a  glass  darkly.'  By  the  close  of  1894,  I  expect 
to  witness  a  degree  of  recovery  far  beyond  what  most  of  us  now 
dare  to  predict.  To  that  extent,  I  am  willing  to  become  a  prophet." 

Now,  this  process  of  reasoning  was  based  on  a  comparison 
of  the  past  with  the  present,  and  the  conclusions  were  drawn  on 
premises  that  left  out  the  surprises  which  never  can  be  fore- 
seen. Such  results  might  have  been  as  foreshadowed,  even 
in  the  face  of  the  semi-free-trade  measure,  had  it  not  been 
for  fresh  agitation  at  the  wrong  time  on  the  silver  question 
in  connection  with  the  Sherman  Act. 

Nobody  can  now  dispute  my  right  to  reason  on  the  practical 
consequences  of  the  Wilson  Law  after  it  has  cost  the  nation 


RETROSPECTS  AND  PROSPECTS.       159 

a  positive  deficiency  debt  of  $200,000,000  ;  to  say  nothing  of 
the  far  greater  loss  in  trade  and  commerce  and  the  various 
national  industries,  together  with  the  untold  sufferings  borne  by 
the  armies  of  idle  laborers,  the  depressed  and  bankrupt  condi- 
tion of  our  farmers ;  and  last,  though  not  least,  the  business 
of  Wall  Street  reduced  to  a  state  of  stagnation  never  experi- 
enced prior  to  that  time.  I  refer  to  the  time  between  the 
passage  of  that  measure  and  the  inauguration  of  Mr.  McKinley, 
and  for  a  month  or  two  after  the  latter  event,  while  free-trade 
consequences  were  still  at  work  and  ably  assisted  in  their  de- 
pressing effect  by  obstructionists  in  the  United  States  Senate. 


CHAPTER   XXII. 

THE  TRANS-MISSOURI   CASE. 

A  ruinous  decision  of  the  Supreme  Court  of  the  United  States.  —  Destruc- 
tive influence  on  values  and  a  blow  to  general  business.  —  A  pool  law 
wanted  that  will  ensure  railroad  and  business  prosperity. 

r  I  "'HERE  has  been  no  other  subject,  perhaps,  in  the  indus- 

_L  trial  world  or  in  finance  and  economics  for  a  long  period, 
on  which  there  has  been  a  greater  variety  of  opinions  than  on 
the  decision  of  the  United  States  Supreme  Court  in  the  case 
of  the  Trans- Missouri  Freight  Association,  on  the  22d  of 
March,  1897.  Nor  has  there  been  any  other  decision  in  a  long 
time  which  took  by  complete  surprise  so  many  judges,  lawyers, 
financiers,  railroad  managers,  and  newspaper  men. 

It  is  my  opinion  that  this  famous  decision  has  done  more 
injury  in  the  disturbance  of  values  and  the  wrecking  of  fortunes 
than  any  half  dozen  judicial  decisions  that  have  ever  been 
rendered  in  this  country.  It  came,  too,  in  the  very  worst 
possible  time,  just  when  the  country  was  making  the  hardest 
struggle  for  recuperation. 

This  Trans-Missouri  Association,  composed  of  eighteen  rail- 
roads beyond  the  Missouri  River,  as  its  name  indicates,  and 
covering  territory  between  that  eastern  boundary  and  the 
Rocky  Mountains,  had  entered  into  an  agreement,  the  real 
purport  of  which  was  to  maintain  rates  up  to  a  living  standard 
on  the  "  live  and  let  live  "  principle  for  all,  and  so  as  to  pre- 
vent any  of  the  properties  from  being  driven  into  bankruptcy 
by  what  is  known  in  railroad  circles  as  "  cut-throat  compe- 
tition." 

Looking  at  the  matter  from  a  common-sense  point  of  view, 
there  seems  to  the  ordinary  mind,  unbiased  by  any  predilec- 

160 


THE   TRANS-MISSOURI    CASE.  ,         i6l 

tions,  nothing  unfair  in  a  proposition  of  this  kind.  It  was 
merely  an  arrangement  for  mutual  defense,  the  bond  of  mutu- 
ality being  assurance  that  the  weaker  brethren  would  not  or 
could  not  readily  shirk  the  maintenance  of  the  principle  of  the 
Association  upon  which  its  efficiency,  vitality,  success,  and  very 
existence  depended,  namely,  that  of  inseparable  union  for  one 
and  the  same  purpose  —  protection  to  all. 

The  essential  motive  was  to  maintain  reasonable  rates,  and 
the  object  of  the  association  is  stated  clearly  by  itself  in  the 
following  language,  "  For  the  purpose  of  mutual  protection  by 
establishing  and  maintaining  reasonable  rates,  rules,  and  regula- 
tions on  all  freight  traffic,  both  through  and  local." 

The  particulars  of  the  agreement,  which  are  described  in 
detail,  relating  to  management  and  disposition  of  freight 
throughout  the  territory  of  the  Association,  are  of  no  special 
interest. 

In  1890  there  was  a  law  passed  of  which  John  Sherman, 
then  United  States  Senator  from  Ohio,  was  the  father.  This 
law  was  directed  against  trusts  that  were  organized  in  restraint 
of  trade  and  against  public  policy.  The  act  was  termed  "  An 
Act  to  protect  Trade  and  Commerce  against  Unlawful  Re- 
straints and  Monopolies."  The  first  short  section  describes, 
in  brief,  all  that  is  material  in  the  act,  for  the  purpose  of  un- 
derstanding its  design.  It  reads  as  follows  :  — 

"  Every  contract  or  combination,  in  the  form  of  trust  or  otherwise, 
or  conspiracy,  in  restraint  of  trade  or  commerce  among  the  several 
states,  or  with  foreign  nations,  is  hereby  declared  to  be  illegal. 
Every  person  who  shall  make  any  such  contract  or  engage  in  any 
such  combination  or  conspiracy  shall  be  deemed  guilty  of  a  mis- 
demeanor, and,  on  conviction  thereof,  shall  be  punished  by  fine  not 
exceeding  five  thousand  dollars,  or  by  imprisonment  not  exceeding 
one  year,  or  by  both  said  punishments  in  the  discretion  of  the 
courts." 

Now,  the  point  to  be  proved  in  this  case  is  that  the  Associa- 
tion in  question  had  been  guilty  of  the  offense  against  which 
the  act  is  directed,  namely,  "  conspiracy  in  restraint  of  trade," 
and  arguments  of  great  length  were  used  for  the  purpose  of 


162         THE  WALL   STREET   POINT  OF  VIEW. 

proving  this  allegation.  The  opinion  was  written  by  Justice 
Wheeler  H.  Peckham  and  consisted  of  about  25,000  words. 
Some  of  the  arguments  are  strong,  but  some  of  them  are  far- 
fetched, and,  to  the  minds  of  the  able  minority  of  four  judges 
of  the  Supreme  Court,  were  far  from  being  conclusive  regarding 
the  guilt  of  the  defendants. 

If  the  Sherman  Anti-Trust  Law  and  its  latest  interpretation 
by  a  bare  majority  of  one  in  the  Supreme  Court  are  to  stand, 
it  is  difficult  to  see  how  any  business  where  more  than  one  is 
concerned  on  either  side,  can  be  transacted  legally.  Almost 
any  transaction  can,  by  strict  literal  interpretation  of  the  words 
of  the  statute  and  the  nature  of  the  case,  be  construed  as  im- 
plying "  conspiracy  and  restraint  of  trade." 

It  seems  to  me  that  the  effect  of  the  Joint  Traffic  Associa- 
tions is  to  hold  up  the  weak  roads,  whereas  the  decision  of  the 
Supreme  Court  is  to  drive  them  into  bankruptcy,  which  will 
enable  the  strong  roads  to  acquire  them  on  their  own  terms. 
This  will  make  poor  corporations  poorer  and  rich  corporations 
richer.  If  railroads  are  to  be  compelled  to  surrender  to  the 
decision  of  the  United  States  Supreme  Court,  then  consolida- 
tion of  roads  will  be  the  inevitable  result,  and  before  the  close 
of  the  next  decade  we  may  witness  in  this  country  four  or  five 
great  systems  of  railroads,  instead  of,  as  at  present,  several 
hundreds  of  them.  Already  strong  evidences  of  this  appear  in 
the  New  York  Central  and  Pennsylvania  acquisitions.  Neither 
the  Supreme  Court  nor  Congress  can  interfere  with  one  road 
leasing  itself  to  another,  nor  preventing  one  road  from  buying 
another;  therefore,  instead  of  discouraging  consolidation  of 
roads,  which  should  be  the  case  for  the  general  good  of  the 
country,  the  Sherman  Anti-Trust  Law,  under  the  Supreme 
Court  decision,  will  drive  them  into  a  confederation  comprised 
of  few. 

This  process  would  certainly  be  in  "  restraint  of  trade,"  and 
would  so  far  restrain  the  smaller  roads  as  to  wipe  them  out  of 
existence,  making  the  monopolistic  circle  of  management  more 
and  more  circumscribed  at  every  freezing-out  operation,  until 
the  supreme  managerial  power  would  be  in  the  hands  of  a  few 


THE   TRANS-MISSOURI   CASE.  163 

companies  or  possibly  only  one.  This  would  be,  as  it  appears 
to  me,  a  very  dangerous  power,  not  only  in  restraint  of  trade, 
but  in  restraint  of  government  as  well.  It  might  soon  become 
powerful  enough  to  dictate  terms  to  government.  Then  what 
after  that?  Probably  a  railroad  oligarchy  to  supersede  the 
Republic,  rendered  possible  by  the  manner  in  which  the 
highest  court  of  the  nation  had  been  forced  to  interpret  an 
unwise  statute  which  throttled  the  freedom  of  contract  and 
broke  up  the  government  for,  of,  and  by  the  people. 

The  decision,  however,  settles  the  question  in  the  meantime 
regarding  any  combination  or  agreement  among  railroad  com- 
panies to  prevent  ruinous  rate-cutting  where  the  facts  are  so 
clearly  on  record  that  they  are  capable  of  proof;  and  it  would 
never  do  to  invent  or  devise  mere  schemes  of  evasion  of  the 
law,  for  this  would  be  a  false  and  fraudulent  method  of  doing 
business.  The  companies,  however,  can  act  individually  and 
independently,  and  if  they  would  only  observe  the  amenities  of 
good  society  toward  one  another,  things  might  go  very  well 
practically. 

If  the  Joint  Traffic  Association,  for  instance,  should  be  com- 
pelled to  disband  under  the  decision  of  the  United  States 
Supreme  Court,  why  could  not  the  members  of  that  association 
form  themselves  into  a  social  club,  where  they  could  meet  and 
confer  with  each  other  ?  It  would  certainly  tend  to  preserve 
a  harmonious  feeling  amongst  them,  and  most  likely  result  in 
uniformity  of  action  in  the  conduct  of  their  business.  They 
could  talk  over  the  rate  question  among  themselves  and  easily 
arrive  at  conclusions.  One  of  the  number  could  then  establish 
on  his  road  the  rates  talked  of,  and  all  the  others  would  have  the 
right  to  adopt  similar  ones  voluntarily.  Such  action  could  not 
be  considered  as  a  combination  or  an  agreement  in  restraint  of 
trade  and  commerce.  It  is  a  well-known  fact  that  most  of  the 
important  diplomatic  matters  in  the  relations  between  civilized 
nations  are  talked  over  and  virtually  arranged  at  the  social 
board,  which  is  about  the  same  method  as  that  proposed  above 
for  the  railroad  managers  to  meet  the  present  unfortunate  pre- 
dicament in  which  they  are  placed. 


1 64         THE  WALL   STREET   POINT   OF   VIEW. 

Though  the  opinion  of  the  majority  of  the  court  observes  in 
many  of  its  paragraphs  an  apparently  strict  adherence  to  the 
letter  of  the  law,  it  may,  perhaps,  neglect  the  spirit  to  a  certain 
extent.  The  law,  in  its  essence,  is  the  very  thing  that  the  court 
asserts  its  infraction  to  be.  It  is  in  restraint  of  trade  and  against 
public  policy.  The  only  reliable  relief,  therefore,  is  to  be  found 
in  its  repeal.  All  plans  that  may  be  invented  to  help  tide 
over  the  trouble  will  prove  nothing  but  temporary  makeshifts, 
and  will  be  likely  to  involve  the  experimenter  in  further  dif- 
ficulties. 

Returning  to  the  decision,  it  will  be  seen  that  the  chief  point 
of  disagreement  between  the  majority  and  the  minority  reports 
is  that  the  majority  adheres  to  an  extremely  literal  construction, 
unmindful  of  the  scriptural  admonition  that  "  the  letter  killeth, 
but  the  spirit  giveth  life  " ;  while  the  minority  dwells  on  the 
spirit  and  the  supposable  intention  of  the  law ;  for  nobody  who 
knows  the  man  can  conceive  of  the  possibility  of  John  Sherman 
framing  a  measure  that  would  drive  people,  possessed  of  the 
most  honest  intentions,  out  of  business,  and  help  to  throw  into 
chaos  that  financial  fabric  which  he  has  spent  many  of  the  best 
years  of  his  life  in  helping  to  construct. 

This  view  the  minority  more  fully  elucidates  by  the  following 
strictures  on  the  forced  construction  of  the  majority  :  — 

"  But,  admitting  arguendo  the  correctness  of  the  proposition  by 
which  it  is  sought  to  include  every  contract,  however  reasonable, 
within  the  inhibition  of  the  law,  the  statute,  considered  as  a  whole, 
shows,  I  think,  the  error  of  the  construction  placed  upon  it.  Its  title 
is  '  An  act  to  protect  trade  and  commerce  against  unlawful  restraints 
and  monopolies.'  The  word  'unlawful'  clearly  distinguishes  be- 
tween contracts  in  restraint  of  trade  which  are  lawful  and  those 
which  are  not. 

"The  plain  intention  of  the  law  was  to  protect  the  liberty  of  con- 
tract and  the  freedom  of  trade.  Will  this  intention  not  be  frustrated 
by  a  construction  which,  if  it  does  not  destroy,  at  least  gravely 
impairs  both  the  liberty  of  the  individual  to  contract  and  the  freedom 
of  trade  ?  If  the  rule  of  reason  no  longer  determines  the  right  of 
the  individual  to  contract,  or  secures  the  validity  of  contracts  upon 
which  trade  depends  and  results,  what  becomes  of  the  liberty  of  the 


THE   TRANS-MISSOURI   CASE.  165 

citizen  or  the  freedom  of  trade  ?  Secured  no  longer  by  the  law  of 
reason,  all  these  rights  become  subject,  when  questioned,  to  the  mere 
caprice  of  judicial  authority. 

"  Thus,  a  law  in  favor  of  freedom  of  contract,  it  seems  to  me,  is  so 
interpreted  as  to  gravely  impair  that  freedom.  Progress,  and  not 
reaction,  was  the  purpose  of  the  act  of  Congress.  The  construction 
now  given  the  act  disregards  the  whole  current  of  judicial  authority, 
and  tests  the  right  to  contract  by  the  conceptions  of  that  right 
entertained  at  the  time  of  the  year  books,  instead  of  by  the  light 
of  reason  and  the  necessity  of  modern  society.  To  do  this  violates, 
as  I  see  it,  the  plainest  conception  of  public  policy,  for,  as  said  by 
Sir  G.  Jessel,  Master  of  the  Rolls,  in  Printing  Company  vs.  Samp- 
son, 'If  there  is  one  thing  which  more  than  another  public  policy 
requires  it  is  that  men  of  full  age  and  competent  understanding  shall 
have  the  uttermost  liberty  of  contracting,  and  their  contracts,  when 
entered  into  freely  and  voluntarily,  shall  be  held  sacred,  and  shall 
be  enforced  by  courts  of  justice.' 

"The  remedy  intended  to  be  accomplished  by  the  act  of  Con- 
gress was  to  shield  against  the  danger  of  contract  or  combination 
by  the  few  against  the  interest  of  the  many  and  to  the  detriment  of 
freedom.  The  construction  now  given,  I  think,  strikes  down  the 
interest  of  the  many  to  the  advantage  and  benefit  of  the  few.  It 
has  been  held  in  a  case  involving  a  combination  among  workingmen 
that  such  combinations  are  embraced  in  the  act  of  Congress  in  ques- 
tion, and  this  view  was  not  doubted  by  this  court." 

But  the  destructive  and  inequitable  tendency  of  the  act  is 
probably  most  clearly  discerned  in  the  light  thrown  upon  it  by 
Judge  White's  opinion  on  its  far-reaching  influence  on  labor 
combinations :  — 

"The  interpretation  of  the  statute,  therefore,  which  holds  that 
reasonable  agreements  are  within  its  purview,  makes  it  embrace 
every  peaceable  organization  or  combination  of  the  laborer  to  bene- 
fit his  condition  either  by  obtaining  an  increase  of  wages  or  diminu- 
tion of  the  hours  of  labor. 

"Combinations  among  labor  for  this  purpose  were  treated  as 
illegal  under  the  construction  of  the  law  which  included  reasonable 
contracts  within  the  doctrine  of  the  invalidity  of  contract  or  com- 
binations in  restraint  of  trade,  and  they  were  only  held  not  to  be 
embraced  within  that  doctrine  either  by  statutory  exemption  there- 


166         THE  WALL   STREET  POINT   OF  VIEW. 

from  or  by  the  progress  which  made  reason  the  controlling  factor 
on  the  subject. 

"  It  follows  that  the  construction  which  reads  the  rule  of  reason 
out  of  the  statute  embraces  within  its  inhibition  every  contract  or 
combination  by  which  workingmen  seek  peaceably  to  better  their 
condition.  It  is,  therefore,  as  I  see  it,  absolutely  true  to  say  that 
the  construction  now  adopted,  which  works  out  such  results,  not 
only  frustrates  the  plain  purpose  intended  to  be  accomplished  by 
Congress,  but  also  makes  the  statute  tend  to  an  end  never  contem- 
plated, and  against  the  accomplishment  of  which  its  provisions  were 
enacted. 

"  To  my  mind,  the  judicial  declaration  that  carriers  cannot  agree 
among  themselves  for  the  purpose  of  aiding  in  the  enforcement  of 
the  provisions  of  the  Interstate  Commerce  Law  will  strike  a  blow  at 
the  beneficial  results  of  that  act,  and  will  have  a  direct  tendency  to 
produce  the  preferences  and  discriminations  which  it  was  one  of 
the  main  objects  of  the  act  to  frustrate." 

As  an  instance  of  some  of  the  fallacies  and  inconsistencies  of 
the  reasoning  on  the  part  of  the  majority,  the  following  from 
the  majority  report  is  very  pertinent :  — 

"  In  business  or  trading  combinations,  they  [meaning  the  con- 
spirators aforesaid]  may  even  temporarily  or  perhaps  permanently 
reduce  the  price  of  the  article  traded  in  or  manufactured,  by  reduc- 
ing the  expense  inseparable  from  the  running  of  many  different 
companies  for  the  same  purpose.  Trade  or  commerce  under  these 
circumstances  may,  nevertheless,  be  badly  and  unfortunately  re- 
strained by  driving  out  of  business  the  small  dealers  and  worthy 
men  whose  lives  have  been  spent  therein,  and  who  might  be  unable 
to  readjust  themselves  to  their  altered  surroundings.  Mere  reduc- 
tion in  the  price  of  the  commodity  dealt  in  might  be  dearly  paid  for 
by  the  ruin  of  such  a  class,  and  the  absorption  or  control  over  one 
commodity  by  an  all-powerful  combination  of  capital." 

This  language  is  noteworthy,  for  the  pathetic  sympathy  it  indi- 
cates is  even  more  remarkable  when  the  source  from  which  it 
emanates  is  thoroughly  appreciated.  Shocking  as  it  may  seem 
at  the  first  blush,  these  Supreme  Court  judges  have  all  been 
guilty  of  the  offense  which  they  here  seem  to  deplore.  They 
have  either  established  or  been  prominent  members  of  large 


THE   TRANS-MISSOURI   CASE.  167 

law  firms  open  to  the  charge  of  the  same  kind  of  "  conspiracy 
and  restraint  of  trade"  aforesaid,  and  without  any  compunc- 
tion, so  far  as  the  public  know,  until  exhibited  in  this  opinion. 
They  have,  to  use  their  own  language,  "  driven  out  of  business 
[the  law  business,  however]  worthy  men  whose  lives  have  been 
spent  therein,  and  who  might  have  been  unable  to  readjust 
themselves  to  their  altered  surroundings,"  were  it  not  for  the 
law  trusts.  To  such  disaster  have  these  hard-working,  edu- 
cated, honest  lawyers  been  brought  eventually  through  the 
restraint  of  trade  and  the  unlawful  conspiracy  practiced  by 
the  large  law  firms.  Yet  this  is  not  the  worst  of  it,  as  regards 
the  case  of  the  law  firms  compared  with  other  monopolies 
and  trusts.  The  latter  have  the  merit  of  reducing  the  price 
of  the  commodity  dealt  in,  which  Judge  Peckham  declares 
"  might  be  dearly  paid  for  "  by  the  ruin  of  the  class  producing 
the  commodity.  But  who  ever  heard  of  a  large  law  firm  reduc- 
ing the  price  of  its  advice  and  services  ?  If  it  did,  its  brethren 
of  the  bar  would  in  all  probability  apply  for  a  writ  de  lunatico 
inquirendo  for  the  purpose  of  testing  its  sanity,  or  the  Bar 
Association  would  be  induced  to  introduce  a  bill  in  Congress 
for  the  maintenance  of  "  reasonable  costs." 

In  contradistinction  to  the  majority  of  opinion  it  seems,  on  a 
fair  reading  of  the  Interstate  Commerce  Act,  without  being  too 
closely  technical,  that  Congress  must  have  had  in  mind  the 
idea  of  protecting  reasonable  rates  when  that  measure  was 
passed.  The  first  section  of  the  act  reads  as  follows  :  — 

"  All  charges  for  any  service  rendered,  or  to  be  rendered,  in  the 
transportation  of  passengers  or  property  as  aforesaid,  or  in  connec- 
tion therewith,  or  for  the  receiving,  delivering,  storage  or  handling 
of  such  property,  shall  be  reasonable  and  just,  and  every  unjust  and 
unreasonable  charge  for  such  service  is  prohibited  and  declared  to 
be  unlawful." 

This  would  seem  to  recognize  the  principle  of  maintaining 
reasonable  rates,  and  the  terms  are  evidently  employed  emphat- 
ically in  conspicuous  contrast  to  "unjust  and  unreasonable" 
rates,  which  are  declared  to  be  unlawful. 


168         THE   WALL   STREET   POINT   OF  VIEW. 

One  of  the  worst  features  connected  with  the  Sherman  Anti- 
Trust  Act  has  been  its  uncertainty,  coupled  with  the  possibly  un- 
witting deception  that  has  been  practised  in  its  administration. 
The  law  had  not  only  reposed  quietly  for  six  years  without 
its  mischievous  or  fatal  tendency  being  discovered,  and  without 
giving  any  intimation  of  the  coming  explosion,  but  it  had  lulled 
the  people,  and  especially  the  railroad  companies,  into  a  feel- 
ing of  perfect  security  through  the  several  decisions  of  the 
United  States  District  Court  and  Circuit  Court  of  Appeals. 
In  every  instance  the  pooling  clause  and  the  agreement  to 
sustain  reasonable  rates  had  been  sustained  until  the  Trans- 
Missouri  case  arose.  A  series  of  decisions  by  these  inferior 
courts,  therefore,  had  induced  the  parties  concerned  to  believe 
that  contracts,  like  that  of  the  Trans-Missouri  Freight  Associa- 
tion, were  perfectly  legal,  until  the  surprise  came  from  the 
highest  court  of  appeal.  These  circumstances  all  tended  to 
intensify  the  demoralization  to  business  interests  when  the 
certainty  was  revealed. 


CHAPTER   XXIII. 

THE    LAWS    RELATING    TO    TRUSTS,    CORPORATIONS,   AND 
RAILROADS. 

A  better  administration  of  these  laws  needed.  —  Safeguards  of  corpora- 
tions, and  a  comparison  of  ours  with  those  of  foreign  countries. — 
The  railroad  situation  and  the  Supreme  Court  decision.  —  Views  on 
the  subject. — The  pooling  question  and  business  interests.  —  A  new 
law  to  regulate  railroad  rates  and  to  define  a  violation  of  railroad  law 
indispensable. 

IN  so  far  as  the  laws  on  the  statute  book  are  sufficient  to  deal 
with  any  abuse  that  corporations  or  trusts  may  be  guilty  of, 
the  question  resolves  itself  into  one  of  execution  or  of  enforcing 
the  law ;  and  upon  the  necessity  of  this  in  relation  to  all  business 
concerns  in  the  management  and  profits  of  which  more  than 
one  person  is  interested,  I  have  always  insisted  that  the  terms 
of  the  charters  of  corporations  should  be  fully  complied  with, 
and  that  means  of  a  public  official  character  should  be  resorted 
to  for  the  purpose  of  compelling  such  compliance. 

In  some  foreign  nations  matters  relating  to  corporations  seem 
to  have  better  safeguards  thrown  around  them  than  here. 
France,  Germany  and  Belgium  are  all  noteworthy  in  this  respect, 
and  England  also  could  impart  to  us  some  useful  lessons  learned 
in  the  school  of  hard  experience  since  the  South  Sea  Bubble 
and  the  Mississippi  Scheme.  The  rule  regarding  paid-up  capi- 
tal is  more  strictly  adhered  to  abroad,  and,  in  this  respect  and 
other  matters  of  administration,  New  York  State  lags  behind 
several  other  states,  notably  Massachusetts.  I  see  that  since 
the  famous  court  decision  in  the  Trans-Missouri  case  treated  in 
the  preceding  chapter  much  emphasis  has  been  laid  on  this 
vital  point  of  administration ;  and  Mr.  V.  H.  Lockwood  and  the 

169 


I/O         THE  WALL   STREET   POINT  OF  VIEW. 

Hon.  Perry  Belmont,  both  very  close  reasoners  on  this  subject, 
have  dissected  and  laid  bare  the  insidious  defects  of  the  ad- 
ministration of  existing  laws  in  a  way  that  should  commend 
itself  to  all  lovers  of  justice  and  equity. 

Mr.  Belmont  in  his  very  elaborate  and  pithy  essay  of  twenty- 
five  pages  in  the  North  American  Review  for  April,  1897,  dwelt 
at  some  length  on  the  conflict  of  opinion  in  the  United  States 
Supreme  Court  arising  out  of  state  laws  regarding  railroads  and 
other  corporations ;  and  he  finally  arrived  at  the  conclusion  that 
congressional  legislation  is  absolutely  necessary  to  settle  the 
pending  trouble. 

The  precedents  which  Mr.  Belmont  cites  are  somewhat 
unique  as  well  as  important  in  this  discussion,  and  I  regret  that 
space  will  not  permit  a  full  quotation,  but  I  insert  two  para- 
graphs which  illustrate  his  sharp,  legal,  and  strictly  logical 
method  of  drawing  conclusions  :  — 

"  Although  the  court  has,  by  the  narrow  majority  of  one,  decided 
that  the  law  of  1890  covers  common  carriers,  and  has  adjudged  the 
comprehensiveness  of  the  word  '  every '  before  the  word  '  contract,' 
yet  the  published  conflicting  opinions  have  exhibited  such  evidence 
of  exhaustive  debate  in  the  consultation,  if  not  of  animated  feeling, 
between  the  judicial  disputants  that  there  seems  little  hope  of  a 
change  of  vote  on  reargument,  and  another  consultation  —  the  mem- 
bers of  the  court  divided  on  a  question  of  law,  not  of  fact.  There- 
fore the  question  now  at  issue  is  one  for  Congress. 

"There  are  two  new  and  important  considerations  confronting 
the  country.  On  a  first  superficial  view  it  is  not  easy  to  discover 
why  it  should  be  that  if  railway  directors  are  really  competent  —  if, 
as  the  law  demands,  they  really  direct  in  prescribing  rates ;  if  they 
do  not  abandon  the  work  and  illegally  delegate  it  to  freight  agents 
—  the  railway  corporations  cannot  achieve,  without  formal  agree- 
ments with  each  other,  the  thing  they  have  heretofore  done  by 
agreements  now  condemned  by  the  court. 

"The  other  consideration  is  that  if  it  shall  now  be  seen  that 
organized  private  capital  is  not,  by  its  boards  of  directors  acting  in 
corporations,  capable  of  reasonably  and  safely  conducting  interstate 
railway  transportation,  aided  by  such  help  in  administration  as  an 
energetic  Interstate  Commerce  Commission  can  give,  then  socialism 


THE  LAWS  RELATING  TO  TRUSTS.     1 71 

will  be  heard  in  an  attempt  to  show  that  only  organized  political 
government  can  do  the  work,  as  it  now  does  in  so  many  European 
countries,  and  as  the  Populists  insist  must  be  done  in  the  United 
States,  by  government  ownership  of  railways,  telegraphs,  telephones, 
and  other  agencies  in  public  use." 


It  is  not  amiss  to  call  attention  here  to  the  operations  of 
these  great  combinations  of  capital,  the  development  of  which 
seems  to  have  become  inseparable  from  modern  business 
methods,  and  which  are  in  common  parlance  erroneously 
designated  as  "  trusts." 

To  state  the  case  in  plain  and  simple  terms,  the  object  sought 
to  be  attained  is  to  put  various  interests  belonging  to  different 
parties  together  so  as  to  form  a  large  concern  represented  by 
stock  capital  without  personal  liability,  having  in  view  a  reduc- 
tion in  expenses,  greater  efficiency,  production  on  a  larger 
scale,  and  the  realization  of  greater  profits  without  advancing 
the  price.  When  a  number  of  small  individual  plants  are  thus 
united  for  a  common  object,  under  efficient  official  management, 
the  expenses  are  materially  cut  down.  With  the  increased 
capital  which  this  method  admits,  better  machinery  is  secured, 
with  better  results  in  meeting  foreign  competition,  which  adds 
largely  to  this  country's  exports.  In  this  way  this  country  has, 
during  the  past  ten  years,  increased  to  an  immense  extent  its 
ability  to  compete  successfully  with  Great  Britain  and  other 
European  countries. 

Now,  the  great  and  underlying  principle  that  has  put  it  in 
our  power  during  the  last  decade  to  make  such  an  unprece- 
dented advance  in  a  department  of  commerce  from  which  we 
were  generally  supposed  to  have  been  almost  excluded,  is  that 
of  the  much  maligned  combination  of  capital.  Without  such 
means  as  we  possess  (despite  much  ignorant  hostility)  of  aggre- 
gating capital,  there  could  have  been  no  such  progress  as 
statistics  clearly  demonstrate. 

People  who  take  a  narrow  view  of  the  subject  say  that  the 
system  throws  men  out  of  employment.  To  my  mind  it  is 
evident  that  there  must  have  been  far  more  money  spent  in 


THE  WALL   STREET   POINT   OF  VIEW. 

wages  when  the  manufactured  exports  were  $182,000,000  than 
when  they  were  only  $78,000,000  ten  years  previously.  More 
than  double  the  value  of  material  by  nearly  $300,000,000 
worth,  certainly  could  not  be  moved  by  a  less  number  of  men. 
It  probably  required  more  than  half  as  many  more,  namely  50 
per  cent. ;  and  during  this  period  labor  itself  has  increased  only 
25  per  cent.,  thus  leaving  the  workman  better  off  than  before 
the  combinations  began  to  make  much  progress  in  the  improve- 
ment of  machinery. 

It  seems  unnecessary  to  go  over  much  more  of  the  ground 
in  detail,  as  this  example  very  clearly  and  amply  illustrates 
the  principle. 

Can  anybody  imagine  that  the  railroads  could  employ  an 
army  of  800,000  workmen  at  good  wages  and  that  T^  part  of 
a  cent  per  ton  per  mile  would  make  the  difference  between 
dividend  and  no  dividend  to  certain  prosperous  roads,  if  the 
principle  of  combination  were  not  worked  extensively  in  the 
railroad  industry?  As  similar  arguments  apply  to  other  indus- 
tries with  equal  cogency,  I  consider  it  unnecessary  to  multiply 
examples,  as  any  one  can  do  so  for  himself  simply  by  opening 
his  eyes,  looking  over  the  industrial  field  past  and  present, 
coolly  reflecting  on  the  situation,  and  without  permitting  politi- 
cal prejudice  or  newspaper  sensationalism  to  cloud  his  reason 
or  distort  his  common  sense.  One  of  the  results  inseparable 
from  combinations,  no  matter  how  selfish  the  promoters  may 
be,  is  that  they  make  everything  which  they  produce  cheaper 
to  the  consumer  than  it  possibly  could  be  without  their  exist- 
ence ;  and  the  larger  the  combination,  as  a  rule,  the  better  and 
the  cheaper  is  the  consumer  served.  It  is  only  during  the  brief 
transition  period  of  the  change  from  the  separate  concerns  to 
the  combine  that  wage  earners  suffer.  After  that  they  are 
better  off  and  labor  is  more  fully  employed,  usually  at  higher 
wages.  Many  of  the  smaller  concerns  that  go  into  the  com- 
bines and  obtain  very  profitable  remuneration  for  their  proper- 
ties would  otherwise  become  bankrupt. 

The  fact  that  a  reduction  in  the  price  of  a  manufactured 
article  invariably  stimulates  consumption  needs  no  more  dem- 


THE   LAWS   RELATING   TO  TRUSTS.  173 

onstration  than  that  the  inflexible  law  of  supply  and  demand 
disposes  of  any  fear  as  to  arbitrary  advances  in  price. 

The  chief  good  achieved  by  the  so-called  "  trusts  "  consists  in 
the  power  and  facilities  which  they  possess  of  making  almost 
everything  of  use  and  desirability  cheaper  to  the  consumer 
than  it  could  possibly  be  by  any  other  means.  During  the 
last  two  decades  the  staple  articles  of  commerce  in  general 
have  been  reduced  to  the  consumer  from  15  to  50  per  cent. 
If  the  trust  were  an  octopus,  as  has  often  been  unthink- 
ingly asserted,  these  large  profits,  instead  of  being  divided 
among  consumers,  would  be  appropriated  by  the  trust. 

The  most  important  contributors  to  this  great  desideratum 
on  behalf  of  the  consumers  have  been  the  railroad  corpora- 
tions, frequently  regarded  as  each  a  trust  in  itself.  And  here 
it  is  appropriate  to  remark  that  these  corporations,  as  a  rule, 
above  all  others  least  deserve  to  have  any  odium  attached  to 
them,  for  it  has  chiefly  been  through  them  that  products  of 
every  kind  have  fallen  so  much  in  price,  largely  in  consequence 
of  the  reduction  in  freight  rates  from  3  cents  per  ton  in  1870 
to  about  .805  at  the  present  time. 

If  the  railroad  corporation  or  trust  were  an  octopus  it  would 
have  held  this  important  item  of  nearly  two  cents  a  ton  within 
its  greedy  tentacles,  thus  realizing  many  hundreds  of  millions 
during  the  thirty  years  in  question,  and  a  very  large  amount  in 
the  years  between  the  former  period  and  the  invention  of  the 
locomotive. 

One  of  the  most  difficult  things  connected  with  the  whole 
abstruse  and  vexed  question  of  trusts  is  the  definition  of  the 
term.  So  far  as  anything  approaching  a  clear  idea  of  a  trust 
can  be  gleaned  from  the  Sherman  Act  of  1 890,  which  has  given 
so  much  rise  to  controversy,  it  may  be  defined,  according  to 
the  author  of  the  bill,  as  "a  contract  in  restraint  of  trade 
between  the  different  States." 

The  application  of  this  definition  gave  rise  to  a  good  deal  of 
dissatisfaction  and  controversy  at  the  time  of  the  decision  of  the 
United  States  Supreme  Court  in  the  case  of  the  Trans-Missouri 
Traffic  Association,  The  knotty  point  assumed  in  this  matter, 


174         THE   WALL   STREET   POINT   OF   VIEW. 

as  in  that  of  the  Chicago  warehouse  affair,  was  that  every  busi- 
ness forming  a  part  of  interstate  commerce  and  affected  with 
public  interest  should  be  subject  to  the  legislation  and  control 
of  Congress. 

To  show  how  poor  a  chance  the  general  public  has  of  under- 
standing the  rendition  of  this  Sherman  Act,  the  division  of 
opinions  of  the  Supreme  Court  in  that  case  will  amply  illustrate 
the  point  in  question.  There  were  two  issues  before  the  Court, 
one  being  as  to  whether  the  Sherman  Anti-Trust  Law  applied  to 
railways,  and  the  other  related  to  the  nature  of  agreements  in 
restraint  of  trade,  partial  as  well  as  general. 

The  Court  was  divided,  the  decision  being  rendered  by  the 
casting  vote  of  Chief  Justice  Fuller,  who,  with  four  others  — 
Justices  Harlan,  Brewer,  Brown,  and  Peckham  —  held  that  the 
statute  applied  to  railroads  and  included  every  agreement  in 
restraint  of  trade  which  might  be  entered  into  by  any  company, 
corporation,  or  person.  The  opinion,  which  was  about  half  as 
long  as  the  latest  novel  or  law  book,  was  written  by  Justice  Peck- 
ham.  The  minority  opinion,  in  which  four  of  the  nine  Justices 
coincided,  dissented  from  the  majority  on  both  issues.  They 
held  that  common  carriers,  being  already  under  the  regulation 
of  the  Interstate  Commerce  Law,  were  not  within  the  purview 
and  were  not  to  be  held  within  the  operation  aimed  against 
trusts.  They  maintained  that  the  statute  can  be  rightly  con- 
strued as  applying  only  to  general  and  unreasonable  contracts 
in  restraint  of  trade,  and  not  to  reasonable  contracts  only  par- 
tially having  that  effect.  They  also  held  that  to  extend  its 
operations  to  all  contracts  and  agreements  indiscriminately 
would  not  only  be  destructive  of  the  freedom  of  contract  and 
of  trade,  but  against  the  whole  current  of  judicial  authority. 
The  opinion  goes  on  to  say :  "  The  plain  intention  of  the  law 
was  to  protect  the  liberty  of  contract  and  the  freedom  of  trade. 
Will  this  intention  not  be  frustrated  by  a  construction  which,  if 
it  does  not  destroy,  at  least  gravely  impairs  both  the  liberty  of 
the  individual  to  contract  and  the  freedom  of  trade?  If  the 
rule  of  reason  no  longer  determines  the  right  of  the  individual 
to  contract,  or  secures  the  validity  of  contracts  upon  which 


THE   LAWS   RELATING  TO   TRUSTS.  175 

trade  depends  and  results,  what  becomes  of  the  liberty  of  the 
citizen  or  the  freedom  of  trade  ?  Secured  no  longer  by  the  law 
of  reason,  all  these  rights  become  subject,  when  questioned,  to 
the  mere  caprice  of  judicial  authority.  Thus,  a  law  in  favor  of 
freedom  of  contract  is  so  interpreted  as  gravely  to  impair  that 
freedom.  Progress  and  not  reaction  was  the  purpose  of  the 
act  of  Congress.  The  construction  now  given  to  the  act  dis- 
regards the  whole  current  of  judicial  authority.  The  remedy 
intended  to  be  accomplished  by  the  act  of  Congress  was  to 
shield  against  the  danger  of  contract  or  combination  of  the  few 
against  the  interest  of  the  many  and  to  the  detriment  of  free- 
dom. The  construction  now  given  strikes  down  the  interest 
of  the  many  to  the  advantage  and  benefit  of  the  few." 
The  following  comments  were  entirely  to  the  purpose  :  — 
"  The  interpretation  of  the  statute,  which  holds  that  reason- 
able agreements  are  within  its  purview,  makes  it  embrace  every 
peaceable  organization  or  combination  of  the  laborer  to  benefit 
his  condition,  either  by  obtaining  an  increase  of  wages  or  a 
diminution  of  the  hours  of  labor.  It  is,  therefore,  absolutely 
true  to  say  that  the  construction  now  adopted  which  works  out 
such  results  not  only  frustrates  the  plain  purpose  intended  to 
be  accomplished  by  Congress,  but  also  makes  the  statute  tend 
to  an  end  never  contemplated  and  against  the  accomplishment 
of  which  its  provisions  were  enacted." 

In  the  light  of  practical  events  it  will  be  observed  that  the 
Sherman  Law  has  a  very  plausible  but  at  the  same  time  a  very 
seductive  and  deceptive  reading.  The  pretence  is  that  it  is 
directed  against  "  unlawful  restraints  of  trade,"  while  it  really 
intermeddles  with  agreements  of  a  lawful  character  indispensa- 
ble to  the  equitable  distribution  of  profits  among  the  members 
of  a  company  or  corporation.  The  execution  of  the  law  thus 
imposes  hardships  and  suffering  of  the  most  tyrannical  char- 
acter upon  innocent  people,  as  illustrated  in  the  Trans-Missouri 
case,  by  the  interpretation  of  the  law  by  which  it  is  made  a 
crime  for  people  united  in  the  same  kind  of  business  to  have 
a  fair  division  of  their  honest  and  equitable  profits.  A  large 
amount  of  those  profits  is  distributed  among  the  people  at 


1/6         THE   WALL   STREET   POINT   OF   VIEW. 

large  for  the  various  necessaries  of  life,  through  grocers,  bakers, 
clothiers,  landlords  etc.  Thus  we  see  that  a  trust  or  combine 
of  this  description,  instead  of  being  an  octopus  or  greedy 
monopoly,  assumes  the  character  of  a  most  beneficent  agent 
of  distribution  in  every  walk  of  life. 

Arbitrary  laws,  after  the  manner  and  spirit  of  the  Sherman 
Act,  are  calculated  to  rob  people  of  their  vested  rights,  and  are 
clearly  in  violation  of  that  clause  of  the  Fifth  Amendment  to 
the  Constitution  which  states  that "  No  person  shall  be  deprived 
of  property  without  due  process  of  law,  nor  shall  private  prop- 
erty be  taken  for  public  use  without  just  compensation." 

The  practical  effect  of  this  wrong  was  clearly  set  forth  in  the 
famous  Nebraska  Maximum  Freight  Rate  case,  in  which  it  was 
shown  that  the  reduction  effected  in  freight  rates  by  the  legis- 
lature amounted  to  about  thirty  per  cent,  of  the  entire  rate  as 
fixed  by  the  company  upon  an  equitable  paying  basis.  The 
case  was  brought  into  the  United  States  Supreme  Court  to 
test  the  validity  of  the  law  passed  by  the  Nebraska  Legisla- 
ture of  1893,  prescribing  the  maximum  freight  rate  within  the 
State  of  Nebraska.  It  has  been  estimated  that  if  the  law  of 
Nebraska  were  carried  out  in  this  instance,  its  execution 
would  amount  to  a  practical  confiscation  of  the  railroads  in 
that  State. 

It  would  seem  to  be  a  most  desirable  thing,  calculated  to 
disarm  prejudice  and  at  the  same  time  to  conserve  public 
right,  that  the  several  States  should  unite  in  passing  laws  requir- 
ing these  great  industrial  combinations  to  submit  periodical 
statements  of  their  financial  condition  and  operation.  Such 
legislation  should  be  in  the  line  of  that  governing  the  railroad 
corporations ;  and  in  the  case  of  corporations  transacting  busi- 
ness in  several  States,  supervision  could  be  very  properly 
lodged  with  the  present  Interstate  Commerce  Commission  by 
enactment  of  a  national  law.  The  industrials  cannot  expect  to 
gain  full  public  confidence  until  they  furnish  reliable  annual  or 
semi-annual  reports  of  their  operations  and  conditions.  In  view 
of  the  enormous  powers  and  advantages  which  they  hold,  the 
public  has  a  right  to  this  information ;  and  legislation  against 


THE   LAWS   RELATING   TO   TRUSTS.  177 

the  trusts  could  take  no  wiser  or  more  effective  form  than 
an  enforced  publicity.  By  such  means  the  public  would  be 
protected  against  monopolistic  abuses,  investors  would  be  saved 
from  fraud,  and  the  industrials  themselves  would  gain  through 
commanding  the  confidence  which  many  of  them  now  lack. 

One  thing,  which  seems  to  me  very  defective  about  legisla- 
tion in  regard  to  trusts  and  corporations,  is  that  we  are  left  very 
much  in  the  dark  as  to  what  acts  constitute  a  violation  of  the 
law.  This  part  of  the  statutes  is  so  indefinite  that  the  judi- 
ciary has  quite  too  wide  a  range  afforded  it  for  definition ;  and 
this  defect  becomes  especially  marked  when  a  judge  without 
practical  business  and  financial  knowledge  attempts  to  adjudi- 
cate upon  a  case,  for  a  clear  understanding  of  which  such  an 
equipment  is  indispensable.  Knowledge  of  this  character 
should  be  better  represented  on  the  Supreme  Bench,  and  it  is 
not  so  difficult  to  procure  at  the  present  time  as  it  has  been  in 
the  past,  for  many  lawyers  now  get  a  fair  business  and  com- 
mercial education,  and  certain  members  of  the  United  States 
Bar  all  over  the  country  have  in  the  last  few  years  organized 
themselves  into  a  special  association  for  the  promotion  of  the 
study  and  practice  of  commercial  law.  I  believe  many  of  the 
best  lawyers  will  agree  with  me  when  I  say  that  this  educational 
defect  was  clearly  visible  in  the  majority  opinion  of  the  Supreme 
Court  in  the  Trans-Missouri  case,  and  I  say  it  without  any  dis- 
position to  detract  from  the  great  ability  of  the  learned  mem- 
bers of  that  court. 

This  kind  of  training  is  seen  to  advantage  wherever  it  is 
brought  into  the  settlement  of  questions  involving  a  combina- 
tion of  law  and  business  calculations.  The  point  was  recently 
illustrated  in  ah  interview  of  a  daily  newspaper  with  the  Hon. 
Chauncey  M.  Depew,  in  which  he  spoke  of  a  case  where  free 
railroad  competition  had  sway,  and  a  merchant  in  a  small  town 
who  gave  all  his  business  to  one  road  on  exclusive  terms  was 
enabled  through  a  special  rate  to  monopolize  the  business  of 
that  town  and  freeze  out  the  other  merchants  in  the  same  line. 
If  pooling  had  been  permitted  under  proper  surveillance  and 
regulation,  this  action  in  restraint  of  trade  could  not  have  hap- 

N 


1 78         THE   WALL   STREET   POINT   OF   VIEW. 

pened,  and  a  lawyer  who  was  expert  in  commercial  matters 
could  have  warned  the  victims  of  the  impending  danger. 

The  want  of  a  rule  to  follow  in  defining  what  is  an  act 
involving  this  so-called  crime  of  "  restraint  of  trade  "  was  con- 
spicuously illustrated  in  the  abortive  attempt  of  the  Lexow  Com- 
mittee to  discover  illegality  in  the  organization  and  workings  of 
certain  corporations.  In  its  report  it  floundered  around  in  a 
very  ridiculous  fashion,  aiming  fruitlessly  at  some  definite 
charge  to  prefer. 

Some  organization  akin  to  the  Massachusetts  Commission, 
now  so  generally  referred  to  in  the  periodicals,  might  be  a  good 
medium  for  helping  to  enforce  the  law  in  cases  of  alleged  delin- 
quency, and  for  defining  more  clearly  what  a  violation  of  the  law 
is,  so  that  a  person  or  a  company  could  know  when  an  illegal 
act  had  been  committed ;  for  these  are  things  of  which  every- 
body but  the  Supreme  Court  appears  to  be  ignorant.  The 
District  Court  and  Circuit  Court  of  Appeals  are  equally  in 
the  dark  with  all  who  may  have  anything  to  do  with  the  ques- 
tion, and  who  may  be  liable  to  be  involved  in  the  commis- 
sion of  an  indefinite  and  undefined  crime  punishable  by  fine  of 
$5000  and  a  year's  imprisonment. 

There  are  sufficiently  urgent  reasons  why  Congress  should 
intervene  in  a  matter  of  such  paramount  importance  and  take 
a  short  cut  toward  ending  the  danger  by  the  adoption  of  a  law 
or  resolution  to  the  effect  that  the  Sherman  Anti-Trust  Law  shall 
not  apply  to  the  railroads.  This  would  at  once  end  the  troubles 
arising  out  of  the  decisions  of  the  Supreme  Court  in  the  Trans- 
Missouri  case,  and  prevent  any  such  difficulties  in  the  future ; 
while  the  question  of  devising  new  legal  regulations  authorizing 
pooling,  revising  the  relations  between  the  roads  and  the  Inter- 
state Commission,  and  for  holding  destructive  competition  in 
check,  could  be  easily  left  over  for  more  mature  consideration. 
The  question  is  a  great,  complicated,  and  difficult  one ;  and  its 
final  solution  by  legislative  enactments  can  be  reached  only  by 
calm  and  more  or  less  protracted  deliberation. 

Upon  the  whole,  it  is  reasonable  to  expect  that  the  more 
exciting  phases  of  this  question  have  been  passed.  Time  is 
now  ripe  for  readjustment. 


CHAPTER   XXIV. 

CURRENCY  LEGISLATION. 

Beneficent  effect  of  the  New  Currency  Law.  —  Our  improved  credit  shown 
by  our  new  two  per  cent,  bonds  at  a  premium.  —  Gold  now  our  unequivo- 
cal standard  of  value.  —  Baneful  effects  of  previous  uncertainty  as  to 
our  standard. — Advantage  to  trade  and  to  money-movement  of  the 
extension  of  national  banks.  —  Good  effect  of  the  gold  enactment  on 
the  value  of  American  securities  abroad.  —  The  surprising  and  dazzling 
era  of  business  prosperity  into  which  the  world  is  entering. 

BY  far  the  most  important  and  most  beneficial  act  of  finan- 
cial legislation  since  the  resumption  of  specie  payment 
has  been  accomplished  by  the  recent  passage  of  the  so-called 
New  Currency  Bill.  Its  provisions  are  calculated  to  prove  of 
great  aid  in  maintaining  the  even  tenor  of  prosperity,  through 
a  stability  of  the  bases  of  credit,  and  hence,  of  necessity,  a 
stability  of  credit  itself.  No  country,  be  its  resources  never  so 
vast,  can  develop  these  resources  even  through  domestic  com- 
merce, without  the  underlying  guaranty  of  a  perfectly  sound 
financial  system  upon  which  credit  may  be  established,  and 
without  which  latter  trade  languishes.  Credit  is  the  life  of 
the  individual,  of  commerce,  and  of  the  country.  Therefore, 
I  say  that  in  placing  the  national  financial  system  upon  an 
absolute  gold  basis,  the  Fifty-sixth  Congress  has  placed  to  its 
own  credit,  and  that  of  the  entire  administration,  a  very  great 
sum  of  national  prosperity,  to  be  enjoyed  by  them  and  by 
the  country  at  large  for  many  years  to  come. 

The  first  and  immediate  result  has  been  seen  in  our  ability 
to  refund  a  considerable  portion  of  the  national  debt  at  a  two 
per  cent,  interest-bearing  note,  thereby  effecting  a  saving  of 
many  millions  a  year  in  interest.  Moreover,  these  two  per 
cent,  bonds  command  a  premium  in  the  markets  of  the  world, 

179 


180         THE  WALL   STREET   POINT   OF   VIEW. 

placing  the  credit  of  the  government  of  the  United  States  in 
the  first  rank. 

Our  unequivocal  standard  of  value  is  now  that  of  all  the 
great  civilized  nations.  To  be  sure,  so  far  as  the  actuality 
went,  our  wise  Secretaries  of  the  Treasury  have  always  practi- 
cally maintained  our  finances  upon  a  gold  basis ;  but  hereto- 
fore there  have  always  been  the  elements  of  uncertainty  and 
apprehension,  the  possibility  of  different  and  erroneous  inter- 
pretations of  the  duties  of  the  Secretary  of  Treasury.  Now,  our 
declaration  of  faith,  as  put  on  the  statute  books  in  the  year  of 
grace  1900,  leaves  no  longer  any  ground  for  distrust. 

It  will  be  well  remembered  how,  in  times  past,  upon  the 
least  indication  of  financial  agitation,  gold  has  been  withdrawn 
from  this  country  in  enormous  quantities.  In  another  chapter 
I  have  already  referred  to  the  disastrous  effects  which  were 
brought  about  in  very  large  measure  by  the  depletion  of  the 
Treasury's  stock  of  gold,  this  tremendous  drain  being  the  direct 
result  of  the  fear  that,  through  the  pernicious  effects  of  the 
nonsensical  and  unsound  16  to  i  silver  agitation,  we  were 
drifting  more  or  less  rapidly,  but  none  the  less  surely,  to  a  silver 
basis.  The  reason  for  such  great  apprehension  of  danger  is 
not  far  to  seek.  Our  securities  had  been  held  in  enormous 
volume  by  Europe,  which  had  paid  us  for  them  in  gold,  invest- 
ing its  money  in  good  faith  as  to  its  security.  The  inevitable 
result  of  a  threat,  however  remote,  that  when  it  came  to  taking 
back  these  securities  by  either  purchase  or  redemption,  we 
would  pay  for  them  in  depreciated  silver,  was  an  outpouring 
upon  us  in  vast  quantities  of  the  stocks  and  bonds.  The  accom- 
panying panic  and  its  direful  train  of  disasters  before  temporary 
legislative  relief  came,  are  matters  which  have  been  fully  treated 
elsewhere  in  these  pages. 

But  we  may  cheerfully  turn  away  from  such  contemplation,  in 
the  assurance  of  being  safeguarded  from  any  further  danger 
from  that  source.  American  securities  may  now  be  held  in 
foreign  countries,  without  any  misgivings  as  to  their  repayment 
in  the  best  money  of  the  world.  And  herein  lies  a  great  pro- 
moting factor  in  stability.  The  movements  of  gold  will  be  left 


CURRENCY   LEGISLATION.  l8l 

free  to  the  natural  influence  of  supply  and  demand.  The 
current  will  simply  flow  where  money  may  be  most  needed  at 
the  time,  or  where  it  may  command  the  best  interest  rate. 
Consequently,  hoarding  of  the  yellow  metal  is  a  thing  of  the 
past.  Gold  is  the  most  timid  commodity  in  the  world,  but  now, 
when  it  seems  reasonably  sure  it  will  not  be  driven  out  of  the 
country  by  an  overwhelming  deluge  of  degraded  money,  it  will 
not  hide  away  in  strong  boxes  and  vaults,  but  will  come  forward 
to  give  its  invaluable  assistance  in  the  regulation  and  adjustment 
of  the  exchanges  inseparable  from  business. 

The  extension  of  the  limit  of  bank  circulation  to  the  par  value 
of  government  bonds  held  in  Washington  as  security,  is  a  wise 
provision  of  the  bill  under  discussion.  While  emphasizing  the 
excellent  credit  we  enjoy  as  a  nation,  it  permits  a  considerable 
increase  in  the  volume  of  money  in  circulation,  really  necessary, 
and  at  the  same  time  perfectly  safe  in  its  nature,  being  a  natural 
and  gradual  expansion  and  not  an  inflation  of  the  currency. 

I  look  favorably  as  well  upon  the  provision  for  the  founding 
of  national  banks  upon  smaller  capitalization  than  hitherto 
required.  I  think  that  one  result  of  this  will  be  the  establish- 
ment of  a  large  number  of  these  institutions  in  a  profitable  field 
of  action,  namely,  at  smaller  points  throughout  the  great  cotton 
and  grain-growing  districts.  The  relief  that  this  would  afford 
the  large  money  centers  of  the  country  is  needed.  The  periods 
of  crop  movement  are  invariably  periods  of  disturbance  and 
stringency  in  the  money  markets.  If  banking  facilities  are 
brought  nearer  to  these  vast  agricultural  sections,  and  more 
widely  distributed  through  them,  a  very  great  measure  of  the 
burden  of  crop  movements  will  be  lifted  from  the  banking  insti- 
tutions of  the  East.  Here  again  we  observe  another  element 
tending  toward  the  stability  of  trade.  Our  legislators  have 
wisely  refrained  from  interference  with  the  greenback  legal 
tenders,  which  are  a  necessity  from  the  best  economic  point  of 
view. 

Taking  the  Currency  Bill  all  in  all,  therefore,  we,  as  a  nation, 
have  good  cause  for  self-congratulation.  Our  credit,  based 
upon  a  sure  foundation,  is  the  best  in  the  world.  Confidence 


1 82         THE  WALL   STREET   POINT  OF  VIEW. 

is  an  established  institution  in  this  country,  and  whoever  may 
assail  it  should  receive  short  shrift  from  every  thinking  man,  be 
he  capitalist  or  day  laborer. 

There  has  been  a  very  considerable  discussion  of  this  currency 
question  within  the  past  few  years,  but  more  especially  during 
the  last  presidential  campaign.  The  people  have  become 
educated  to  a  marked  degree  in  the  rudimentary  principles 
of  a  sound  monetary  system,  and  it  hardly  seems  likely  at  this 
juncture  that  this  knowledge  will  permit  any  other  course  on 
their  part  than  a  continuance  in  power  of  the  great  political 
party  through  whose  instrumentality  so  much  of  substantial 
benefit  to  the  country  has  been  achieved. 

The  effect  of  the  placing  of  this  country  on  a  permanent 
gold  basis  by  national  enactment,  has  not  yet  been  fully 
appreciated  in  Wall  Street,  as  it  has  been  amongst  the  great 
financiers  and  capitalists  of  London.  American  securities  have 
a  backing  now  for  intrinsic  worth  such  as  they  have  never  had 
before,  through  the  status  which  the  adoption  of  the  gold 
standard  has  given  them,  of  which  there  can  be  no  revocation. 
The  attention  of  the  world  will  be  called  to  American  securities 
more  forcibly  than  ever  before,  from  this  time  forth,  making 
them  more  sought  after  for  permanent  holding.  Now  that  the 
misgivings  as  to  the  future  of  our  money  have  been  settled,  the 
important  factor  of  a  large  commercial  balance  in  our  favor  will 
prevent  the  return  of  such  misgivings.  Our  present  large  rail- 
road earnings  will  inevitably  encourage  the  making  of  future 
investments  on  a  large  scale  in  this  country,  at  the  termination 
of  the  South  African  war. 

The  present  wonderful  showing  made  by  American  railway 
and  industrial  corporations  is  only  a  foreshadowing  of  the 
immense  activity  to  come.  The  entire  world  is  entering  upon 
an  era  of  commercial  progression  and  prosperity  that  will  far 
surpass  all  existing  records.  National  conquests  will  in  time 
be  made  by  the  weapons  of  commerce  rather  than  by  those  of 
war.  The  great  increase  in  the  gold  product  of  the  world  is 
the  moving  power,  and  the  faster  the  precious  metal  is  brought 
up  from  the  bowels  of  the  earth,  the  greater  will  be  the  impetus 


CURRENCY   LEGISLATION.  183 

of  business  ventures  and  developments.  The  future  will  be 
brilliant  in  inventions  and  discoveries,  and  in  the  advancement 
of  gigantic  business  enterprises,  without  limit  as  to  sphere.  We 
are  to  witness  a  race  of  mankind  for  supremacy  in  the  world's 
markets.  The  "  open  door  "  will  be  the  policy  of  all  the  great 
powers.  The  completion  of  the  trans-Siberian  railway  points 
to  the  development  of  the  heretofore  almost  unknown  resources 
of  Russia.  Upon  the  ending  of  the  Transvaal  War  we  shall 
see  a  tremendous  sweep  of  civilization  into  Africa,  which  means 
the  opening  up  of  its  well-nigh  fabulous  resources.  Who  can 
gainsay  that  the  results  will  be  marvelous?  There  is  not  a 
corner  of  the  globe  where  they  will  not  be  felt.  These  are  the 
prevailing  conditions  in  this  closing  year  of  a  wonderful 
century.  The  prospect  for  the  century  to  come  is  indeed  a 
dazzling  one. 


CHAPTER  XXV. 

PROPHETIC  VIEWS  ON   SILVER. 

A  review  of  the  subject  prior  to  the  great  presidential  campaign  which  re- 
sulted in  the  maintenance  of  the  gold  standard.  —  Bryan's  great  coup 
at  the  Chicago  Convention  in  1896,  which  he  carried  by  the  power  of 
plagiarism  from  the  old  play  of  "Jack  Cade." — The  deadly  parallel  of  the 
two  comedians.  — A  decent  respect  for  old  plays  to  be  encouraged. — 
The  theory  of  an  international  agreement  discussed,  and  the  theory  of 
national  free  coinage  of  silver  shown  to  be  erroneous  and  fraught  with 
national  danger. — The  effect  upon  international  trade  would  be  disas- 
trous. —  A  plan  proposed  for  an  international  currency  that  would  greatly 
facilitate  business  operations  in  all  channels  of  trade  and  commerce,  and 
vastly  aid  the  progress  of  prosperity  in  this  country.  —  What  is  left  of 
the  silver  issue  to-day. 

SENATOR  STEWART  is  reputed  to  be  the  principal  author 
of  the  bill  which  is  said  to  have  demonetized  silver,  by 
providing  for  the  coinage  of  the  trade  dollar  which  Mr.  Stewart 
imagined  would  create  an  immense  foreign  demand  for  silver 
in  China,  Japan,  and  India.  It  did  not,  however,  and  Senator 
Stewart  has  been  unhappy  ever  since  for  being  chiefly  instru- 
mental in  the  passage  of  that  bill,  and  has  tried  very  hard  to 
fasten  the  responsibility  for  it  upon  the  wicked  and  avaricious 
gold  monometallists. 

This  piece  of  legislation  in  1873-74  opened  the  door  for 
further  action  on  the  part  of  Congress,  and  accordingly  that 
honorable  body,  on  July  22, 1876,  framed  a  measure  in  the  shape 
of  a  joint  resolution  of  both  Houses,  limiting  the  coinage  of  the 
trade  dollar  to  export  demand,  and  repealing  its  legal  tender 
quality  in  the  United  States.  It  never  was  demonetized,  except 
in  this  sense  and  until  the  time  here  stated,  which  was  three 
years  after  the  alleged  "crime  of  1873." 

Provision  was  made  by  the  act  of  February  19,  1887,  to  re- 

184 


PROPHETIC   VIEWS   ON   SILVER.  185 

ceive  the  trade  dollar,  "  if  not  defaced,  mutilated,  or  stamped," 
at  the  office  of  the  Treasurer  or  any  Assistant  Treasurer  of  the 
United  States,  in  exchange  for  a  like  amount,  dollar  for  dollar, 
of  standard  silver  dollars,  or  of  subsidiary  coin  of  the  United 
States,  to  be  melted  and  recoined.  There  were  35,965,924  of 
the  trade  dollars  coined  in  all,  but  I  have  no  account  of  the 
number  returned  to  the  Treasury ;  and  I  should  state  that  these 
trade  dollars  were  not  counted  in  the  silver  purchased  by  pro- 
vision of  the  Bland  and  Sherman  Acts. 

This  is  the  history,  in  brief,  of  what  is  indignantly  called  the 
"  crime  of  1873  "  by  the  silverites,  but  which  was  not  consum- 
mated until  1876,  and  for  which  eminent  silverites  were  them- 
selves mainly  responsible,  being  accessory  to  the  "  crime  "  both 
before  and  after  the  fact.  The  "  crime  "  was  really  a  free-coinage 
act  and  remained  so  until  1876,  so  there  was  no  intermission 
authorized  by  law  in  the  free  coinage  of  silver  from  the  estab- 
lishment of  the  mint  in  1792  until  1876 ;  and  from  the  former 
period  up  to  1873,  an  interval  of  eighty-one  years,  under  this 
free-coinage  law,  there  were  only  8,000,000  silver  dollars  coined 
in  the  United  States.  It  must  be  admitted  that  during  this 
time  the  silver  dollars  of  several  other  nations,  notably  those 
of  Mexico  and  Spain,  were  freely  circulated  in  the  United 
States ;  bat  there  is  no  means  of  procuring  statistics  as  to  the 
volume  of  the  foreign  currency. 

It  is  said,  though  history  is  not  very  clear  about  it,  that  by 
order  of  President  Jefferson  silver  coinage  was  discontinued  for 
many  years ;  but  Jefferson  never  had  any  authority  to  issue 
such  a  mandate,  and,  if  it  ever  was  issued,  it  was  a  dead  letter. 
The  total  number  of  silver  dollars  coined  up  to  December, 
1893,  the  Limited  Coinage  Act  having  been  in  existence  from 
the  passage  of  the  Bland  Bill  in  1878,  was  427,304,000.  So, 
if  it  is  volume  of  money  that  is  required,  it  would  appear  that 
the  restricted  coinage  of  silver  is  better  adapted  to  reach  that 
end  than  free  coinage. 

In  the  same  connection,  and  as  a  vital  part  of  this  subject, 
it  is  necessary  to  refer  to  the  lady  who,  while  an  employee  in 
the  Treasury,  wrote  a  book  in  which  she  charged  Ernest  Seyd 


186         THE  WALL   STREET   POINT  OF  VIEW. 

of  London,  an  agent  of  the  Rothschilds,  of  having  been  in  this 
country  at  the  time  the  "  crime  of  1873  "  was  committed,  and 
that  he  touched  the  "  itching  palms  "  of  some  of  the  assassins 
of  free  silver  with  a  liberal  amount  of  Rothschild's  gold.  It  is 
well  authenticated  that  Mr.  Seyd  was  in  London  at  the  time 
and  had  not  been  in  this  country  for  more  than  a  dozen  years 
prior  to  the  agitation  over  the  silver  question,  and  there  are 
letters  of  his  on  record  advising  certain  statesmen  on  this  side 
not  to  think  of  demonetizing  silver.  Seyd  was  an  uncompro- 
mising bimetallist,  and  an  able  writer  and  author  on  the  subject. 
Yet,  with  all  this  evidence  easily  procurable,  the  silverite  ora- 
tors took  as  their  text  the  error  in  that  lady's  book  and  were 
particularly  noisy  on  the  strength  of  it,  and  they  will,  I  have  no 
doubt,  do  so  again.  That  author  is  dead,  I  believe.  She  wrote 
simply  from  hearsay  evidence. 

Let  us  now  go  to  Chicago  and  pay  our  respects  to  Mr.  Bryan 
and  a  few  of  his  political  friends.  As  I  have  already  intimated, 
the  doleful  state  of  the  country  arising  from  the  Cleveland 
panics  had  caused  the  people  to  look  around  for  a  change 
in  the  Executive  as  well  as  in  the  party  of  which  he  was  the 
chosen  chief;  and  thus  Mr.  Bryan  and  his  colleagues  were  en- 
abled to  capture  the  Democratic  machine  at  Chicago  in  1896. 
The  fiery  eloquence  of  the  "  Boy  Orator,"  coupled  with  the 
revolutionary  enthusiasm  of  a  number  of  his  followers,  took  the 
convention  by  storm,  when  the  machine  politicians  were  off 
their  guard.  It  was  a  kind  of  historic  repetition  of  a  scene  in 
English  politics,  of  which  Disraeli  said  in  his  epigrammatic  way 
that  Sir  Robert  Peel  and  his  party  caught  the  Whigs  bathing 
and  stole  their  clothes. 

But  the  "  smartest "  thing  that  Bryan  did  at  Chicago  was  at 
the  close  of  his  peroration,  when  he  delivered  with  intense  fer- 
vor and  deep  emotion,  as  if  it  were  the  inspiration  of  the 
moment,  a  portion  of  the  metaphorical  speech  of  an  English 
low  comedian  in  the  old  play  of  "  Jack  Cade,  or  The  Bond- 
man of  Kent,"  which  drew  vociferous  applause  at  Chicago, 
almost  as  loud  as  that  from  the  "gods"  in  Drury  Lane  and 
Sadler's  Wells,  generations  ago. 


PROPHETIC   VIEWS   ON   SILVER.  187 

I  quote  verbatim  from  both  the  modern  and  the  ancient 
actor,  and  leave  the  inference  to  the  reader  in  the  discovery  of 
resemblance.  I  quote  the  last  paragraph  of  Bryan's  peroration 
in  full,  so  that  his  masterly  art  can  be  the  better  appreciated. 
After  making  the  modest  claim  that  the  issue  of  1896  was  the 
issue  of  1776,  he  concluded  as  follows  :  — 

"  Therefore  we  care  not  upon  what  lines  the  battle  is  fought.  If 
they  say  bimetallism  is  good,  but  that  we  cannot  have  it  till  some 
nation  helps  us,  we  reply  that  instead  of  having  a  gold  standard  be- 
cause England  has,  we  shall  restore  bimetallism,  and  then  let  England 
have  bimetallism  because  the  United  States  has.  (Applause.)  If 
they  dare  to  come  out  in  the  open  and  defend  the  gold  standard  as 
a  good  thing,  we  shall  fight  them  to  the  uttermost,  having  behind 
us  the  producing  masses  of  this  nation  and  the  world.  Having 
behind  us  the  commercial  interests  and  the  laboring  interests,  and 
all  the  toiling  masses,  we  shall  answer  their  demands  for  a  gold 
standard  by  saying  to  them :  *  You  shall  not  press  down  upon  the 
brow  of  labor  this  crown  of  thorns.  You  shall  not  crucify  mankind 
upon  a  cross  of  gold?  " 

The  words  in  italics  are  dovetailed  in  the  end  of  that  pero- 
ration like  a  piece  of  mosaic,  and  do  great  credit  to  Mr.  Bryan's 
editorial  capacity.  Uttered  with  dramatic  effect,  they  were 
madly  and  unanimously  cheered,  the  convention  went  wild, 
and  nothing  could  restrain  it  until  it  nominated  the  orator  by 
unanimous  acclamation.  It  was  difficult  to  succeed  in  obtain- 
ing even  a  complimentary  mention  for  other  prominent  mem- 
bers of  the  party.  The  convention  had  no  ears  for  any  name 
but  that  of  Bryan. 

Now  let  us  examine  the  "crown  of  thorns"  and  "mammon's 
cross"  in  "Jack  Cade."  The  dramatist  puts  the  following 
language  into  the  mouth  of  the  hero  of  the  comedy,  just  as 
Bryan  made  himself  the  hero  of  the  serio-comic  drama  at 
Chicago  :  — 

"  Upon  the  brow  of  toil  thou  shalt  not  place  the  crown  of 
thorns,  and  the  bondman  of  the  soil  shall  not  be  crucified  upon 
mammon's  cross." 

The  resemblance  is  too  striking  to  have  been  the  result,  as 


1 88         THE  WALL  STREET   POINT  OF  VIEW. 

sometimes  happens,  of  two  men  of  similar  modes  of  thought, 
thinking  alike  and  using  similar  language.  The  only  material 
changes  made  by  the  modern  speaker  are  that  he  uses  the 
word  "  gold  "  instead  of  "  mammon,"  and  the  word  "  mankind  " 
instead  of  the  words  "  bondman  of  the  soil."  The  construction 
of  the  clause  in  which  the  words  "  crown  of  thorns  "  occur  is 
simply  changed  by  transposition,  but  the  plagiarism  is  manifest. 

One  moral  to  be  drawn  from  this  is,  —  Never  despise  an  old 
play.  It  may  make  your  fortune.  Wherever  you  see  one  on  a 
second-hand  book  stall,  pick  it  up  and  drop  your  five  cents  for 
it,  even  if  it  should  be  the  price  of  your  car-fare  home.  It 
may  not  enable  you  to  reach  the  presidential  chair,  but  the  old 
play,  if  it  contains  a  good  stock  of  epigrams,  may  obtain  for 
you  a  lecturing  engagement  for  a  year  at  £1000  a  lecture. 

I  do  not  take  any  credit  to  myself  for  being  somewhat  pro- 
phetic on  the  result  of  the  silver  agitation  as  it  happened  in 
the  change  of  national  administration  in  November,  1896,  for  I 
believe  the  consequence  was  easily  foreseen  by  all  persons 
familiar  with  the  general  principles  of  finance  and  currency  and 
unbiased  by  political  affiliations.  It  may  not  be  uninteresting, 
however,  to  those  of  my  readers  who  followed  up  the  great  dis- 
cussion on  that  subject,  to  know  what  I  thought  about  the  mat- 
ter at  the  period  prior  to  the  time  when  the  disputations  had 
arisen  to  fever  heat.  In  September,  1892,  I  wrote  the  follow- 
ing, which  was  published  in  The  Independent :  — 

"  The  outworking  of  the  world's  pregnant  silver  problem  is  rapidly 
nearing  the  phase  of  finality.  All  nations  are  agreed  as  to  the 
transcendent  importance  of  the  question,  and  that  assent  finds  a 
fitting  expression  in  the  prospective  assembling  of  representatives 
of  the  leading  governments  to  consider  whether  any  concerted  means 
can  be  devised  to  stay  the  drift  toward  the  common  demonetization 
of  the  white  metal.  Nothing  short  of  an  international  treatment  can 
effectually  deal  with  the  question ;  and  if  the  conference  to  assemble 
next  month  closes  without  devising  radical  remedial  measures,  the 
rehabilitation  of  silver  may  be  abandoned  as  a  hopeless  case,  and  a 
currency  revolution  the  world  over  may  prove  to  be  the  result. 

"  Any  expedient  short  of  a  compact  between  a  majority  of  the  lead- 
ing nations  to  coin,  upon  a  common  valuation  and  without  restriction, 


PROPHETIC  VIEWS   ON   SILVER.  189 

all  silver  brought  to  their  mints,  must  fail  to  accomplish  anything 
beyond  a  paltry  and  transient  alleviation  of  the  depreciation  of 
silver  bullion.  It  would  be  premature  to  prophesy,  in  advance  of 
the  conference,  whether  any  such  radical  conclusion  will  issue  from 
its  deliberations.  It  appears,  however,  entirely  safe  to  assume  that 
neither  England  nor  Germany  will  commit  themselves  to  free 
coinage ;  and  the  chances  of  any  hopeful  results,  therefore,  narrow 
down  to  the  possibilities  of  the  old  Latin  Union  nations  combining 
with  the  United  States  and  British  India  to  maintain  the  unrestricted 
coinage  of  silver,  either  on  the  basis  of  the  present  valuation  of  15$ 
to  i,  or  upon  some  lower  valuation.  It  would  not  be  easy  to  over- 
estimate the  force  and  influence  of  such  a  combination ;  and  con- 
sidering the  extreme  gravity  of  the  alternative  course  of  allowing 
silver  to  drift  without  any  regulating  force,  many  practical  observers 
are  likely  to  regard  such  an  expedient  as  well  deserving  an  earnest 
trial.  So  deeply,  however,  has  confidence  in  the  possible  stability  of 
silver  been  shaken,  and  so  impressed  are  European  statesmen  with 
the  expediency  of  evading  all  the  risks  attending  silver  money  by  put- 
ting their  respective  countries  upon  the  exclusive  gold  basis,  that 
there  is  little  probability  that  a  limited  international  agreement  of  this 
nature  may  be  realized. 

"With  so  much  uncertainty  about  the  outcome  of  the  forth- 
coming conference,  it  may  not  be  deemed  premature  to  consider 
what  course  should  be  taken  in  the  event  of  a  barren  issue  of  its 
deliberations.  Few  practical  financiers  would  be  disposed  to  en- 
courage further  tinkering  and  delay.  With  very  good  reason  it 
would  be  argued  that,  if  the  dangers  attending  the  present  position 
of  silver  are  not  sufficient  to  alarm  Europe  into  undertaking  its 
treatment  in  earnest,  it  is  hopeless  to  dream  that  the  great  powers 
will  at  some  future  time  come  to  appreciate  the  necessity  for  action. 
The  failure  of  the  conference  would  most  probably  be  followed  by  a 
further  depreciation  of  silver.  That  debasement  might  but  too  easily 
produce  world-wide  despair  of  the  metal  being  retained  in  use  for 
any  function  beyond  that  of  a  subsidiary  currency ;  and  it  is  not  diffi- 
cult to  foresee  what  would  be  the  result  of  such  a  surrender  of  hope. 
The  disposition  to  discard  silver  would  become  almost  universal. 
The  metal  that,  under  wiser  counsels,  might  have  been  restored  to 
coordinancy  with  gold,  would  be  thrown  upon  the  market  while  gov- 
ernments, banks,  and  individuals  were  shunning  it ;  and  what,  under 
such  conditions,  might  be  the  extent  of  its  further  depreciation? 

"  In  such  a  crisis,  the  United  States  could  have  but  one  safe  alter- 
native. To  continue  the  coinage  of  silver  would  be  the  wildest 


190         THE  WALL   STREET  POINT   OF  VIEW. 

insanity.  Fortunately  our  stock  of  the  nobler  metal  is  large  enough 
to  enable  us  to  put  our  currency  system  upon  the  simple  gold  basis, 
and  that  should  be  our  first  and  instant  duty.  Our  silver  should  be 
withdrawn  as  fast  as  the  public  convenience  might  permit,  and  its 
place  filled  by  correspondingly  augmented  issues  of  bank  notes  ;  but, 
so  long  as  our  silver  was  kept  in  circulation,  it  should  be  held  equal 
to  gold  in  the  payment  of  debts.  Any  policy  short  of  this  would 
expose  us  to  the  loss  of  our  gold  and  to  consequent  drifting  into 
an  exclusively  silver  currency.  For  in  the  contingency  supposed, 
every  European  nation,  and  most  probably  India  also,  would  seek  to 
protect  itself  by  accumulating  the  yellow  metal. 

"  However  impossible  it  might  be  to  get  gold  enough  to  put  the 
world  at  large  upon  the  gold  basis,  yet  every  nation  would  not  the 
less  become  a  competitor  for  that  metal,  and  all  sorts  of  means 
would  be  employed  to  deplete  our  large  stock  and  to  control  our 
current  production.  Moreover,  it  is  never  to  be  forgotten  that  we 
stand  exposed  to  such  a  drain  beyond  all  other  countries,  from  the 
circumstance  of  our  immense  foreign  indebtedness.  Probably  two 
billions  of  our  securities  are  held  in  Great  Britain  and  on  the  Conti- 
nent ;  and  to  allow  room  for  any  doubt  of  our  ability  to  pay  those 
obligations  in  gold  or  its  equivalent,  would  be  to  invite  a  return  of 
these  foreign-held  stocks  and  bonds  to  an  extent  sufficient  to  trans- 
fer to  Europe  the  bulk  of  our  supply  of  gold. 

"  It  is  impossible  to  exaggerate  the  great  gravity  of  this  factor  in 
the  situation.  It  is  not  easy  to  say  what  is  impossible  in  the  way 
of  financial  disaster  when  the  sensitive  fears  of  a  large  mass  of 
investors  are  aroused.  Our  past  trifling  with  silver  —  though  but 
a  transient  incident  of  debased  politics  —  has  proved  sufficient  to 
bring  home  some  $150,000,000  of  securities,  thereby  causing  an 
export  of  over  $100,000,000  of  gold  which  otherwise  would  have 
been  kept  in  the  country.  What,  then,  might  be  expected  if  we 
showed  any  inclination  toward  a  policy  that  seemed  to  threaten 
the  payment  of  hundreds  of  millions  of  our  foreign  debts  in  silver 
instead  of  gold  ?  In  view  of  this  danger,  it  is  to  the  last  degree 
imperative  that,  in  the  event  of  the  failure  of  the  conference  to  pro- 
vide for  international  free  coinage,  the  most  prompt  and  positive 
steps  should  be  taken  to  afford  universal  assurance  that  the  United 
States  would  discard  silver,  conserve  gold,  and  adopt  the  single 
gold  standard.  That  being  done,  we  could  have  nothing  serious 
to  fear  from  the  failure  of  the  conference ;  but  any  course  short  of 
that  would  invite  the  most  serious  forms  of  financial  disaster. 

"  The  situation  created  by  the  position  of  silver  very  directly 


PROPHETIC   VIEWS   ON   SILVER.  191 

suggests  the  question  whether  something  cannot  be  done  toward 
economizing  the  use  of  gold  in  international  intercourse.  The 
extensive  use  of  that  metal  in  the  settlement  of  foreign  balances 
is  an  anomalous  waste  of  the  utility  of  the  most  potent  force  of 
finance.  It  has  no  justification  in  necessity ;  it  is  a  useless  relic  of 
a  bygone  age.  The  internal  exchanges  of  the  several  nations  are 
settled  without  the  intervention  of  money,  and  why  should  the 
same  kind  of  economy  be  impracticable  in  the  adjustment  of  inter- 
national balances?  The  nation  that  is  debtor  this  month  is  cred- 
itor next,  and  we  send  millions  of  gold  to  England  to  pay  our  debts 
maturing  in  September,  when  the  same  cash  may  have  to  be  re- 
shipped  in  October  to  settle  England's  debts  to  the  United  States. 
As  the  whole  commerce  between  the  two  nations  is  conducted  by 
means  of  credits,  why  should  it  be  difficult  to  adjust  these  oscillat- 
ing balances  of  trade  through  the  use  of  a  suitable  form  of  credit 
instrument  ?  Gold  settlement  is  so  obviously  needless,  so  costly 
and  so  deranging  to  the  world's  money  markets,  that  the  only  ques- 
tion to  be  seriously  considered  is,  —  What  form  of  instrument  would 
be  best  adapted  to  supersede  cash  settlements  ? 

"  In  other  references  to  this  matter,  I  have  suggested  that  the 
leading  governments  might  issue  a  bond  bearing  a  low  rate  of  inter- 
est and  possessing  qualities  specifically  adapting  it  for  international 
transfer.  If  it  should  be  found  impracticable  to  induce  national  gov- 
ernments to  undertake  such  an  arrangement,  or  if  it  were  objected 
that  political  contingencies  would  make  the  value  of  a  government 
obligation  fluctuating  and  uncertain,  is  there  any  valid  obstacle  to 
the  issue  of  a  suitable  credit  under  other  entirely  safe  and  feasible 
auspices?  Every  financial  center  of  the  world  has  its  clearing 
house,  or  national  bank,  or  community  of  resourceful  bankers,  any 
of  which  contains  the  raw  material  from  which  this  international 
currency  might  be  formed.  In  some  countries  one  of  these  forms 
of  organization  might  be  found  most  available,  and  in  others  an- 
other. In  England,  France,  and  Germany,  it  would  probably  be 
found  most  feasible  to  invest  the  respective  national  banks  with  the 
needful  powers  of  issue,  whilst  in  the  United  States,  the  New  York 
Clearing  House  might  be  induced  to  perform  the  function  under 
due  authorization.  The  issuers  should  occupy  a  status  that  would 
enable  them  to  command  confidence  under  all  possible  contingen- 
cies, and  should  be  required  to  deposit  unquestionable  guaranties 
against  the  issues.  The  notes  should  bear  a  low  rate  of  interest 
and  be  payable  on  demand  upon  the  makers.  The  issuer  would 
receive  cash  for  the  notes,  which  would  constitute  an  important 


192          THE   WALL   STREET   POINT   OF  VIEW. 

banking  resource  the  use  of  which  would  enable  the  issuer  to  pay 
the  interest  carried  on  the  notes.  This  interest-bearing  quality 
would  prevent  the  notes  from  being  immediately  sent  home  for 
redemption ;  and  thus,  at  all  the  centers  of  foreign  finance,  there 
would  always  be  an  accumulation  of  this  international  currency 
issued  in  the  various  nations ;  and  that  fund  would  be  available  in 
lieu  of  so  much  gold  for  the  settlement  of  interstate  balances." 

Again,  in  September  of  1898,  I  wrote  the  following :  — 

"  Some  unwelcome  surprise  is  felt  at  the  silver  issue  again  raising 
its  head  in  Western  politics.  The  politicians  of  that  section  feel 
impelled  to  take  up  the  old  fad  in  the  absence  of  other  policies  that 
would  attract  public  interest.  The  money  conference  recently  held 
at  Omaha  showed  by  the  composition  and  the  spirit  of  its  speakers 
that  there  is  still  enough  of  the  old  free-coinage  spirit  among  the 
politicians  to  keep  up  a  certain  amount  of  agitation ;  and  this  is 
unfortunate  in  view  ot  the  distrust  which  the  past  excitement  has 
created  in  European  investment  circles. 

"  It  is  well  that  this  foreign  jealousy  about  our  money  standard 
is  so  vigilant,  for  it  is  precisely  at  that  point  that  any  attempt  to 
force  the  adoption  of  free  coinage  would  meet  its  first  check.  We 
may  prostitute  the  force  of  law  by  compelling  our  own  citizens  to 
accept  an  unstable  or  depreciated  form  of  money,  but  we  can  apply  no 
such  compulsion  to  foreign  countries.  For  all  that  we  buy  from  them, 
they  would  demand  settlement  in  gold ;  and  if  we  should  drive  our 
gold  out  of  the  country,  then  our  settlements  must  be  made  in  silver, 
not  at  its  fictitious  face  value,  but  at  its  true  bullion  value.  On  the 
other  hand,  our  exports  would  be  paid  for  not  in  gold,  but  in  silver 
at  its  current  rate  of  depreciation.  No  country  so  situated  can  suc- 
cessfully compete  in  foreign  commerce  with  nations  which  pay  and 
receive  payments  in  the  most  stable  form  of  money. 

"To  meet  this  pregnant  fact  with  the  empty  assertion  that  we 
can  afford  to  assume  a  position  of  independence  of  foreign  com- 
merce is  merely  to  substitute  braggadocio  and  falsehood  where  hon- 
est argument  fails.  Even  before  this  revolution  could  get  under 
headway  it  would  be  self-overthrown.  Before  the  mania  had  run 
its  course  for  one  month  the  consequences  would  be  upon  us  in  all 
their  force.  And  what  then  ?  Would  the  country  supinely  permit 
the  ruin  to  run  its  unchecked  course  and  wait  for  the  worst  possible 
culminations  of  disaster?  Not  for  a  moment.  There  are  some 
follies  so  monstrous  as  to  be  impossible  even  at  the  hands  of  mad- 


PROPHETIC   VIEWS   ON   SILVER.  193 

men.  There  is  always  a  limit  somewhere  to  the  freaks  of  political 
lunacy;  and,  in  this  case,  the  strait-jacket  would  be  put  in  use 
before  the  precipice  was  reached.  The  men  who  control  finance 
would  see  the  consequences  before  the  consummation  of  the  act,  and 
a  clear  prospect  of  the  enactment  of  a  free-coinage  law  would  pro- 
duce anticipatory  effects  which  would  either  prevent  the  passage  of 
the  law  or  bring  about  its  repeal  quickly  upon  its  enactment. 

"  Men  who  scientifically  and  practically  understand  the  destruc- 
tiveness  of  this  scheme,  and  the  effects  which  the  approach  of  its 
consummation  must  have  upon  public  feeling,  have  no  fear  about 
the  agitation  beyond  the  possibility  of  its  bringing  us  near  to  the 
verge  of  an  appalling  catastrophe.  They  are  satisfied  beyond  ques- 
tion that,  if  free  coinage  could  be  enacted  at  all,  its  duration  would 
be  but  momentary.  This  view  is  now  so  generally  understood  that 
the  silver  mania  affects  but  a  small  minority,  consisting  largely  of 
fanatics." 


CHAPTER  XXVI. 

PRESIDENT  McKINLEY'S  POLICY  AND  THE  NATION'S 
FUTURE. 

A  resume  of  the  policy  of  the  present  administration  as  outlined  in  the  in- 
augural address  of  the  President,  speaking  for  himself  and  his  party.  — 
The  keynote  of  his  policy  is,  first,  sufficient  revenue  to  run  the  gov- 
ernment.—  Afterward,  a  commission  on  the  currency  question. — The 
wisdom  of  McKinley's  policy  in  putting  revenue  and  tariff  reform  before 
the  currency.  —  Revision,  but  not  revolution,  of  the  tariff.  —  The  govern- 
ment to  remain  in  the  banking  business,  but  the  currency  to  be  taken 
out  of  politics  and  remodeled  without  reducing  the  volume.  —  Industrial 
interests  and  the  rights  of  labor  to  be  guarded  against  foreign  invasion. 

A  LTHOUGH  President  McKinley's  inaugural  address  was 
2^\.  published  long  since,  it  contains  much  valuable  material 
and  profound  thought,  that,  more  fully  elucidated  by  the  prog- 
ress of  events,  will  be  highly  interesting  for  many  years  to 
come.  In  this  chapter,  therefore,  I  propose  to  make  a  brief 
resume1  of  the  policy  of  the  President  as  outlined  in  his  in- 
augural address,  especially  his  financial  policy. 

That  address  was  unique  in  the  manner  in  which  it  got  down 
to  the  most  important  business  without  any  preliminaries.  The 
President  first  described  the  business  situation,  as  he  found  it, 
in  the  most  succinct  terms.  After  a  few  introductory  remarks, 
he  said :  — 

"The  responsibilities  of  the  high  trust  to  which  I  have  been 
called  —  always  of  grave  importance  —  are  augmented  by  the  pre- 
vailing business  conditions,  entailing  idleness  upon  willing  labor 
and  loss  to  useful  enterprises. 

"The  country  is  suffering  from  industrial  disturbances,  from 
which  speedy  relief  must  be  had. 

"  Our  financial  system  needs  some  revision ;  our  money  is  all 
good  now,  but  its  value  must  not  further  be  threatened.  It  should 

194 


McKINLEY'S   POLICY  — THE   NATION'S   FUTURE.     195 

all  be  put  upon  an  enduring  basis,  not  subject  to  easy  attack,  nor  its 
stability  to  doubt  or  dispute. 

"  Our  currency  should  continue  under  the  supervision  of  the 
government.  The  several  forms  of  our  paper  money  offer,  in  my 
judgment,  a  constant  embarrassment  to  the  government,  and  a  safe 
balance  in  the  Treasury  is  absolutely  indispensable.  Therefore  I 
believe  it  necessary  to  devise  a  system  which,  without  diminishing 
the  circulation  medium  or  offering  a  premium  for  its  contraction, 
will  present  a  remedy  for  these  arrangements  which,  temporary  in 
their  nature,  might  well  in  the  years  of  our  prosperity  have  been 
displaced  by  wiser  provisions. 

"  With  adequate  revenue  secured,  but  not  until  then,  we  can 
enter  upon  such  changes  in  our  finance  laws  as  will,  while  insuring 
safety  and  volume  to  our  money,  no  longer  impose  upon  the  gov- 
ernment the  necessity  of  maintaining  so  large  a  gold  reserve,  with 
its  attendant  and  inevitable  temptations  to  speculation.  Most  of 
our  financial  laws  are  the  outgrowth  of  experience  and  trial,  and 
should  not  be  amended  without  investigation  and  demonstration 
of  the  wisdom  of  the  proposed  changes.  We  must  be  both  'sure 
we  are  right '  and  '  make  haste  slowly.1 " 

When  adequate  revenue  was  once  secured,  many  of  the 
financial  difficulties,  out  of  which  there  seemed  no  easy  way 
during  the  previous  two  or  three  years,  found  their  own  solution. 
For  instance,  the  necessity  for  bond  sales  to  replenish  the  gold 
reserve  no  longer  existed.  This  was  an  inevitable  result  which 
the  former  administration  could  never  see  and  which  the 
McKinley  administration  demonstrated  with  ease;  nor  was  it 
entitled  to  very  much  credit  for  its  discernment,  except  as 
compared  with  its  predecessor. 

"  Our  money  is  all  good  now,  but  its  value  must  not  be  further 
threatened,"  said  the  President.  These  words  are  very  sig- 
nificant, especially  in  their  application  to  those  who  have  been 
proposing  reforms  since  the  inauguration  which  would  strike  at 
the  very  root  of  Mr.  McKinley's  wise  recommendation.  This 
"  value  "  to  which  he  refers  would  certainly  be  further  "  threat- 
ened" by  retiring  the  greenbacks  and  the  Treasury  notes,  and 
thus  converting  a  non-interest-bearing  debt  of  $500,000,000 
into  an  interest-bearing  one. 


196         THE   WALL   STREET   POINT  OF  VIEW. 

"It  has  been  our  practice,"  said  the  President,  "to  retire, 
not  to  increase,  outstanding  obligations."  This,  certainly,  though 
mild  in  form,  was  a  very  strong  rebuke  in  its  essence  to  those 
who  were  diametrically  and  avowedly  opposed  to  these  views. 
Of  course  it  is  all  right  for  cabinet  officers  to  cherish  their  own 
independent  opinions,  but  if  they  try  to  enforce  them  when 
they  are  not  in  harmony  with  the  views  of  the  majority  of  the 
cabinet  or  of  the  President,  I  think  it  has  a  decided  tendency 
to  cause  discord. 

The  whole  plan  of  providing  a  sufficient  revenue,  and  at  the 
same  time  laying  the  true  foundation  of  national  prosperity,  is 
ably  condensed  in  the  following  remarks  of  the  President :  — 

"The  government  should  not  be  permitted  to  run  behind  or 
increase  its  debt  in  times  like  the  present. 

"  Suitably  to  provide  against  this  is  the  mandate  of  duty,  the 
certain  and  easy  remedy  for  most  of  our  financial  difficulties.  A 
deficiency  is  inevitable  so  long  as  the  expenditures  of  the  govern- 
ment exceed  its  receipts.  It  can  be  met  only  by  loans  or  an 
increased  revenue. 

"  While  a  large  annual  surplus  of  revenue  may  invite  waste  and 
extravagance,  inadequate  revenue  creates  distrust  and  undermines 
public  and  private  credit. 

"  Neither  should  be  encouraged.  Between  more  loans  and  more 
revenue  there  ought  to  be  but  one  opinion.  We  should  have  more 
revenue,  and  that  without  delay,  hindrance,  or  postponement. 

"  A  surplus  in  the  Treasury  created  by  loans  is  not  a  permanent 
or  safe  reliance.  It  will  suffice  while  it  lasts,  but  it  cannot  last  long 
while  the  outlays  of  the  government  are  greater  than  its  receipts, 
as  has  been  the  case  during  the  past  two  years.  Nor  must  it  be 
forgotten  that,  however  much  such  loans  may  temporarily  relieve 
the  situation,  the  government  is  still  indebted  for  the  amount  of  the 
surplus  thus  accrued,  which  it  must  ultimately  pay,  while  its  ability 
to  pay  is  not  strengthened  but  weakened  by  a  continued  deficit. 

"  Loans  are  imperative  in  great  emergencies  to  preserve  the  gov- 
ernment or  its  credit,  but  a  failure  to  supply  needed  revenue  in  time 
of  peace  for  the  maintenance  of  either  has  no  justification. 

"The  best  way  for  the  government  to  maintain  its  credit  is  to  pay 
as  it  goes  (not  by  resorting  to  loans,  but  by  keeping  out  of  debt), 
through  an  adequate  income  secured  by  a  system  of  taxation,  external 
or  internal,  or  both. 


McKINLEY'S   POLICY  — THE   NATION'S   FUTURE.     197 

"  It  is  the  settled  policy  of  the  government,  pursued  from  the 
beginning  and  practised  by  all  parties  and  administrations,  to  raise 
the  bulk  of  our  revenue  from  taxes  upon  foreign  productions  enter- 
ing the  United  States  for  sale  and  consumption,  and  avoiding  for 
the  most  part  every  form  of  direct  taxation,  except  in  time  of  war. 

"  The  country  is  clearly  opposed  to  any  needless  additions  to  the 
subjects  of  internal  taxation,  and  is  committed  by  its  latest  popular 
utterance  to  the  system  of  tariff  taxation.  There  can  be  no  mis- 
understanding, either,  about  the  principle  upon  which  this  tariff 
taxation  shall  be  levied.  Nothing  has  ever  been  made  plainer  at 
a  general  election  than  that  the  controlling  principle  in  the  raising 
of  revenue  from  duties  on  imports  is  zealous  care  for  American 
interests  and  American  labor.  The  people  have  declared  that  such 
legislation  should  be  had  as  will  give  ample  protection  and  encour- 
agement to  the  industries  and  the  development  of  our  country. 

"It  is  therefore  earnestly  hoped  and  expected  that  Congress 
will,  at  the  earliest  practicable  moment,  enact  revenue  legislation 
that  shall  be  fair,  reasonable,  conservative,  and  just,  and  which, 
while  supplying  sufficient  revenue  for  public  purposes,  will  still  be 
generally  beneficial  and  helpful  to  every  section  and  every  enterprise 
of  the  people.  To  this  policy  we  are  all,  of  whatever  party,  firmly 
bound  by  the  voice  of  the  people,  —  a  power  vastly  more  potential 
than  the  expression  of  any  political  platform. 

"  The  paramount  duty  of  Congress  is  to  stop  deficiencies  by  the 
restoration  of  that  protective  legislation  which  has  always  been  the 
firmest  prop  of  the  Treasury.  The  passage  of  such  a  law  or  laws 
would  strengthen  the  credit  of  the  government,  both  at  home  and 
abroad,  and  go  far  toward  stopping  the  drain  upon  the  gold  reserve 
held  for  the  redemption  of  our  currency,  which  has  been  heavy  and 
well-nigh  constant  for  several  years." 

The  President  was  exceedingly  circumspect  in  these  recom- 
mendations. He  very  adroitly  anticipated  and  forestalled  the 
critics  who  were  keeping  ostentatious  and  pretentious  watch 
over  Uncle  Sam's  purse. 

In  this  instance  he  drew  the  line  between  these  two  extremes 
of  a  large  surplus  and  a  deficiency  which  have  proved  the  Scylla 
and  Charybdis  of  some  other  administrations.  It  has  been  a 
feast  or  a  famine  with  some  of  them  :  either  too  much  money,  or 
else  an  embarrassment  that  menaced  the  country  with  a  burden 


198          THE  WALL   STREET   POINT   OF   VIEW. 

of  debt  and  the  payment  of  a  big  interest  bill  for  many  years  to 
come.  President  McKinley  can  strike  very  hard  without  being 
offensive,  and  he  has  a  peculiar  knack  of  conveying  a  profound 
meaning  in  what  seem  to  be  the  most  unstudied  expressions, 
as  when  he  said,  for  instance,  "A  surplus  created  by  loans  is 
not  a  safe  reliance." 

The  last  sentence  of  the  above  quotation  from  the  inaugural 
address  is  unique  in  that  it  so  combines  the  two  indispensable 
points  in  legislation,  "  revenue  "  and  the  "  tariff,"  as  to  show 
clearly  without  argument  that  they  cannot  be  considered  apart. 
It  completely  forestalls  in  a  very  simple  style  some  of  the  favor- 
ite arguments  of  the  free-traders,  and  shuts  off  by  way  of  antici- 
pations a  flood  of  opposition  oratory  long  since  prepared  to 
burst  forth  on  the  first  favorable  occasion. 

Events  since  this  very  comprehensive  inaugural  address  was 
delivered  have  fully  justified  the  wisdom  and  foresight  which 
are  implied  in  its  sage  advice.  While  many  financiers  and  pro- 
fessors of  economics  were  working  hard  over  currency  schemes, 
the  advice  of  the  President  to  "  go  slow  "  was  both  timely  and 
prudent,  and  the  admonition  is  as  good  to-day  as  it  was  then. 
His  counsel  concerning  the  most  judicious  methods  of  going 
about  the  question  of  currency  reform  is  worthy  of  the  most 
profound  consideration  of  all  who  are  interested  in  this  subject ; 
and  it  should  be  carefully  studied  by  those  who  imagine  that 
they  have  made  the  only  true  discovery  in  the  department, 
before  they  rashly  run  into  print  with  the  publication  of  their 
views.  He  says  :  — 

"  If,  therefore,  Congress  in  its  wisdom  shall  deem  it  expedient  to 
create  a  commission  to  take  under  early  consideration  the  revision 
of  our  coinage,  banking,  and  currency  laws,  and  give  them  that 
exhaustive,  careful,  and  dispassionate  examination  that  their  impor- 
tance demands,  I  shall  cordially  concur  in  such  action. 

"  If  such  power  is  vested  in  the  President,  it  is  my  purpose  to 
appoint  a  commission  of  prominent,  well-informed  citizens  of  differ- 
ent parties,  who  will  command  public  confidence  both  on  account  of 
their  ability  and  special  fitness  for  the  work.  Business  experience 
and  public  training  may  thus  be  combined,  and  the  patriotic  zeal  of 


McKINLEY'S   POLICY  — THE   NATION'S   FUTURE.     199 

the  friends  of  the  country  be  so  directed  that  such  a  report  will 
be  made  as  to  receive  the  support  of  all  parties,  and  our  finances 
cease  to  be  the  subject  of  mere  partisan  contention.  The  experi- 
ment is,  at  all  events,  worth  a  trial,  and  in  my  opinion  it  can  but 
prove  beneficial  to  the  entire  country. 

"  The  question  of  international  bimetallism  will  have  early  and 
earnest  attention. 

"  It  will  be  my  constant  endeavor  to  secure  it  by  cooperation  with 
the  other  great  commercial  powers  of  the  world.  Until  that  condi- 
tion is  realized  when  the  parity  between  our  gold  and  silver  money 
springs  from,  and  is  supported  by,  the  relative  value  of  the  two  metals, 
the  value  of  the  silver  already  coined,  and  of  that  which  may  here- 
after be  coined,  must  be  kept  constantly  at  par  with  gold  by  every 
resource  at  our  command. 

"  The  credit  of  the  government,  the  integrity  of  its  currency,  and 
the  inviolability  of  its  obligations  must  be  preserved.  This  was  the 
commanding  verdict  of  the  people,  and  it  will  not  be  unheeded." 

The  latter  part  of  this  advice  about  keeping  the  value  of 
silver  at  par  with  gold  until  bimetallism  on  international  prin- 
ciples shall  be  realized,  fell  foul  of  several  well-matured  schemes 
in  both  the  Republican  and  Democratic  ranks  to  get  silver 
out  of  circulation  as  suddenly  as  possible,  both  sides  failing 
to  see  that  the  success  of  such  a  policy  would  give  the  free 
silverites  the  greatest  triumph  they  have  yet  had,  and  would 
be  a  bad  blow  at  the  gold  standard. 

Such  a  serious  and  sudden  contraction  of  the  currency, 
without  something  no  more  expensive  than  silver  to  supply  its 
place,  might  readily  cause  one  of  the  greatest  panics  in  history, 
and  enable  the  free  silverites  to  say  that  their  theory  of  the 
expansion  of  the  currency  volume  would  have  prevented  all 
this ;  the  fact  being,  however,  that  free  coinage  of  silver  would 
probably  have  brought  about  an  even  worse  calamity.  The 
President's  comments,  therefore,  on  this  phase  of  the  subject, 
were  not  only  timely  but  full  of  financial  wisdom,  and  showed 
the  extensive  range  of  financial  vision  with  which  he  is  en- 
dowed. No  doubt  he  had  in  his  mind  the  ordeal  of  business 
embarrassment  through  which  Germany  passed  during  the  few 
years  succeeding  her  demonetization  of  silver,  although  she 


200         THE  WALL   STREET   POINT  OF   VIEW. 

had  the  immense  store  of  gold  furnished  by  the  French  wa: 
indemnity  to  rely  upon. 

The  following  points  on  reciprocity  and  the  power  of  Con- 
gress in  restoring  prosperity  show  the  President's  keen  appre- 
ciation of  the  then  existing  emergencies,  as  well  as  the  means 
of  relief :  — 

"  In  revision  of  the  tariff,  special  attention  should  be  paid  to  the 
reenactment  and  extension  of  the  reciprocity  principle  of  the  law  of 
1890,  under  which  so  great  a  stimulus  was  given  to  foreign  trade. 

"  It  will  take  some  time  to  restore  the  prosperity  of  former  years, 
but  we  can  resolutely  turn  our  faces  in  that  direction,  and  aid  its 
return  by  friendly  legislation.  The  restoration  of  confidence  and 
the  revival  of  business  depend  more  largely  upon  the  prompt,  ener- 
getic, and  intelligent  action  of  Congress  than  upon  any  other  single 
agency  affecting  the  situation." 

The  "  reciprocity  principle  "  was  suppressed  by  mere  par- 
tisan feeling,  but  it  is  hoped  that  we  shall  yet  benefit  largely 
by  its  revival. 

At  the  conclusion  of  the  inaugural  address  the  President 
dilated  further  on  the  necessity  of  the  special  session,  and  cor- 
rected some  popular  errors  concerning  its  purpose  and  influ- 
ence. He  said :  — 

"  I  do  not  sympathize  with  the  sentiment  that  Congress  in  ses- 
sion is  dangerous  to  our  general  business  interests.  Its  members 
are  the  agents  of  the  people,  and  their  presence  at  the  seat  of  gov- 
ernment in  the  execution  of  the  sovereign  will  should  not  operate 
as  an  injury  but  a  benefit.  There  could  be  no  better  time  to  put 
the  government  upon  a  sound  financial  and  economic  basis  than 
now. 

"  The  people  have  only  recently  voted  that  this  should  be  done, 
and  nothing  is  more  binding  upon  the  agents  of  their  will  than  the 
obligation  of  immediate  action.  It  has  always  seemed  to  me  that 
the  postponement  of  the  meeting  of  Congress  until  more  than  a 
year  after  it  has  been  chosen,  deprived  Congress  too  often  of  the 
inspiration  of  the  popular  will,  and  the  country  of  the  corresponding 
benefits. 

"  It  is  evident,  therefore,  that  to  postpone  action  in  the  presence 


McKINLEY'S   POLICY  — THE   NATION'S   FUTURE.    2OI 

of  so  great  a  necessity  would  be  unwise  on  the  part  of  the  Executive, 
because  unjust  to  the  interests  of  the  people.  Our  actions  now  will 
be  freer  from  mere  partisan  consideration  than  if  the  question  of 
tariff  revision  was  postponed  until  the  regular  session  of  Congress. 
"We  are  nearly  two  years  from  a  congressional  election,  and 
politics  cannot  so  greatly  distract  us  as  if  such  contest  was  im- 
mediately pending.  We  can  approach  the  problem  calmly  and 
patriotically,  without  fearing  its  effect  upon  an  early  election." 

The  peroration  of  this  address  is  so  fine,  patriotic,  and  con- 
ciliatory in  tone  and  sentiment,  that  I  consider  it  worthy  of 
being  given  in  full. 

"In  conclusion,  I  congratulate  the  country  upon  the  fraternal 
spirit  of  the  people  and  the  manifestations  of  good  will  everywhere 
so  apparent.  The  recent  election  not  only  most  fortunately  demon- 
strated the  obliteration  of  sectional  or  geographical  lines,  but  to 
some  extent  also  the  prejudices  which  for  years  have  distracted  our 
councils  and  marred  our  true  greatness  as  a  nation. 

"  The  triumph  of  the  people,  whose  verdict  is  carried  into  effect 
to-day,  is  not  the  triumph  of  one  section,  nor  wholly  of  one  party, 
but  of  all  sections  and  all  the  people.  The  North  and  the  South 
no  longer  divide  on  the  old  lines,  but  upon  principles  and  politics  ; 
and  in  this  fact  surely  every  lover  of  the  country  can  find  cause  for 
true  felicitation. 

"  Let  us  rejoice  in  and  cultivate  this  spirit ;  it  is  ennobling,  and 
will  be  both  a  gain  and  blessing  to  our  beloved  country.  It  will  be 
my  constant  aim  to  do  nothing,  and  permit  nothing  to  be  done,  that 
will  arrest  or  disturb  this  growing  sentiment  of  unity  and  coopera- 
tion, this  revival  of  esteem  and  affiliation  which  now  animates  so 
many  thousands  in  both  the  old  antagonistic  sections ;  but  I  shall 
cheerfully  do  everything  possible  to  promote  and  increase  it. 

"  Let  me  again  repeat  the  words  of  the  oath  administered  by  the 
Chief  Justice,  which,  in  their  respective  spheres,  so  far  as  applicable, 
I  would  have  all  my  countrymen  observe :  <  I  will  faithfully  execute 
the  office  of  President  of  the  United  States,  and  will,  to  the  best  of 
my  ability,  preserve,  protect,  and  defend  the  Constitution  of  the 
United  States.' 

"  This  is  the  obligation  I  have  reverently  taken  before  the  Lord 
Most  High.  To  keep  it  will  be  my  single  purpose,  my  constant 
prayer,  and  I  shall  confidently  rely  upon  the  forbearance  and 


202          THE  WALL  STREET  POINT   OF  VIEW. 

assistance   of  the  people  in  the  discharge  of  my  solemn  respon- 
sibilities.' " 

It  is  interesting  to  reflect  how  vividly  these  sentiments  of  the 
oneness  of  all  sections  were  illustrated  during  the  war  with  Spain. 

Apropos  of  Mr.  McKinley's  reference  to  reciprocity,  it  is 
presumed  by  the  free-trade  element  in  politics  that  if  got  down 
to  a  free-trade  level  it  would  greatly  encourage  and  stimulate 
other  nations  to  purchase  our  goods,  produce,  and  manufac- 
tures ;  or,  in  other  words,  that  it  would  "  extend  our  foreign 
markets,"  as  the  ordinary  free-trade  phraseology  has  it.  There 
is  no  good  reason,  resting  upon  business  principles,  to  expect  any 
such  result.  Nations,  like  individuals,  buy  in  the  cheapest  mar- 
ket and  sell  in  the  dearest,  the  latter  being  the  chief  reason  why 
England  is  anxious  to  obtain  control  of  our  markets  for  her 
goods.  The  people  of  other  nations  will  not  buy  anything  for 
friendship's  sake  from  us  that  they  can  get  cheaper  elsewhere ; 
and  certainly  we  do  not  put  any  tariff  on  the  goods  that  we 
send  abroad,  though  free-traders  talk  as  if  we  did.  We  sell  at 
rates  that  will  enable  us  to  compete  with  foreign  manufacturers, 
if  we  can  produce  the  article  cheap  enough  to  come  down  to 
that  scale.  If  we  cannot,  we  have  to  do  the  best  we  can  with 
our  home  market ;  and  if,  as  free-traders  hold,  our  home  mar- 
ket is  already  overcrowded,  it  will  certainly  not  stop  the  native 
glut  if  we  give  away  a  large  portion  of  what  is  too  small  for  our- 
selves to  British  manufacturers  and  to  investors,  speculators, 
and  adventurers  in  British  and  foreign  goods. 

The  people  who  talk  free  trade  seem  to  forget,  when  they  tell 
us  about  the  money  we  save  in  buying  foreign  goods,  that  the 
home-made  goods  afford  about  one  third  or  more  of  the  work- 
ing population  of  this  country  the  means  of  earning  a  living, 
through  the  prudent  and  skillful  investment,  by  our  own  manu- 
facturers, of  money  which  would  on  free-trade  principles  go 
abroad.  It  may  be  objected  that  the  manufacturers  on  this 
side  take  the  lion's  share  of  the  profits.  We  may  grant  that ; 
but  do  not  the  British  manufacturers  and  manufacturers  of  other 
nations  do  the  same  ?  They  are  certainly  not  philanthropists 
in  business.  Besides,  they  do  not  possess  the  merit  of  leaving 


McKINLEY'S   POLICY  — THE   NATION'S   FUTURE.     203 

half  as  much  residue  for  wages  as  the  American  manufacturers 
do.  To  put  the  case  even  as  strongly  as  the  most  rabid  social- 
ist would  do,  namely,  that  it  is  "robbery,"  then  it  is  robbery 
on  both  sides  of  the  Atlantic ;  and,  if  we  are  forced  to  a  choice 
between  two  robbers,  is  it  not  better  to  choose  the  one  that 
will  give  us  enough  of  the  plunder  to  feed  and  clothe  us  de- 
cently, than  to  permit  ourselves  to  be  victimized  by  the  other, 
who  will  reduce  us  to  starvation  and  rob  our  own  "  robber  " 
manufacturers  besides  ?  I,  for  one,  should  certainly  prefer  to 
be  "  robbed  "  by  our  native  monopolists,  who  generally  keep 
the  money  in  the  country  where  I  have  a  chance  of  getting  some 
of  it,  even  though  it  be  not  a  fair  share,  than  to  throw  myself 
and  the  fruits  of  my  labor  recklessly  into  the  hands  of  foreign 
pirates,  who  spend  it  in  Europe  where  we  never  have  a  ghost 
of  a  chance  of  getting  back  a  solitary  cent.  If  this  argument 
is  not  clear  and  conclusive,  common  sense  must  be  a  very 
scarce  commodity,  and  therefore  an  article  of  great  value, 
according  to  the  political  economists. 

One  of  the  strong  charges  of  the  free-traders  is  that  the 
former  McKinley  Law  prevented  importation  in  order  to  give 
the  American  market  to  "  trusts  and  combines."  Suppose,  it 
will  be  granted  for  the  sake  of  argument,  that  they  were  Ameri- 
can trusts  and  combines,  not  British  or  foreign  ?  This  is  simply 
the  same  argument,  and  the  same  answer  applies  to  it.  The 
McKinley  Law  was  "  A  bill  to  reduce  taxation,  and  for  other 
purposes."  Paradoxical  as  it  may  seem,  it  was  more  of  a  free- 
trade  bill  in  one  sense  of  the  term  than  was  the  Wilson 
measure  as  the  latter  finally  passed,  which  put  only  48  per 
cent,  of  all  our  importations  of  merchandise  on  the  free  list, 
while  the  McKinley  Law  let  in  60  per  cent,  of  the  whole  list 
free  of  duty.  There  was  this  important  distinction,  how- 
ever, with  regard  to  the  quality  and  class  of  the  goods :  The 
McKinley  Law  admitted  as  few  articles  as  possible  that  came  in 
competition  with  our  manufacturers,  artisans,  farmers,  mechan- 
ics, and  laborers,  while  the  goods  which  the  Wilson  measure 
admitted  came  largely  in  direct  competition  with  all  these. 
These  five  special  classes  of  our  industrial  system  have  had  the 


204         THE   WALL   STREET   POINT  OF   VIEW. 

object  lesson  which  enables  them  to  draw  conclusions  from 
their  own  respective  standpoints;  and  they  expressed  their 
views  very  forcibly,  more  in  actions  than  words,  by  the  election 
of  President  McKinley  by  an  overwhelming  majority,  and  by 
the  return  of  positive  working  majorities  in  both  houses  of 
Congress,  in  which  the  majorities  four  years  previously  were  so 
decidedly  in  favor  of  something  akin  to  free  trade  that  the 
Democrats  were  predicting  the  enjoyment  of  half  a  century  of 
unassailable  power  in  office.  But  the  people  again  proved 
that  they  themselves  are  the  disposing  power.  It  required  this 
object  lesson  to  teach  the  would-be  reformers  the  great  object 
lesson  that  was  to  be  the  forerunner  of  national  prosperity. 

And  now  what  has  become  of  all  the  free-traders,  with  their 
panaceas  and  specifics  for  all  financial  ills  ?  If  they  are  dead, 
have  they  no  successors  among  their  many  admirers  of  the 
past?  Seldom  has  there  been  in  politics  such  a  large  conver- 
sion of  a  big  majority  into  a  vanishing  minority. 

It  is  important  to  note  the  fact  that  President  McKinley 
favored  revision,  but  not  revolution  of  the  tariff,  and  a  remodel- 
ing of  the  currency  without  diminishing  its  volume.  He  did  not 
propose  "  taking  the  government  out  of  the  banking  business  " 
either;  but  he  did  propose  taking  the  currency  revision  out 
of  politics  by  placing  it  in  the  hands  of  a  commission  composed 
of  up-to-date  business  men,  irrespective  of  party  politics. 
"Taking  the  government  out  of  the  banking  business,"  "The 
endless  chain,"  "  The  greenbacks  must  go,"  and  other  phrases 
of  that  kind  should  now  be  considered  as  having  gone  down 
with  the  general  wreck.  One  of  the  best  and  most  reassuring 
utterances  of  President  McKinley  in  his  inaugural  address  is  this 
sentence  :  "  The  value  of  silver  already  coined  or  to  be  coined 
must  be  kept  at  par  with  gold  by  every  resource  at  our  com- 
mand. The  credit  of  the  government  and  the  integrity  of  its 
obligations  must  be  preserved."  If  Mr.  Cleveland  had  made  a 
similar  statement  in  his  inaugural  address  four  years  before, 
this  country  might  have  been  saved  from  the  disastrous  panics 
which  took  place  during  his  term. 

I  think,  in  conclusion,  that  a  word  of  friendly  counsel  which 


McKINLEY'S   POLICY  — THE   NATION'S   FUTURE.     2O$ 

I  have  already  suggested,  might  not  be  out  of  place,  as  far  as 
the  present  Secretary  of  the  Treasury  is  concerned.  Mr.  Gage 
favors  taking  up  the  greenbacks,  thereby  relieving  the  govern- 
ment from  the  responsibility  of  sustaining  gold  payments  and 
putting  that  obligation  upon  the  national  banks.  IJe  admits 
that  it  would  result  in  a  contraction  of  the  currency  which  would 
depress  values  generally,  but  he  says  the  situation  would  adjust 
itself  through  that  process,  as  values  would  go  down  sufficiently 
low  to  induce  foreign  buying,  which  would  make  gold  flow  this 
way,  so  supplementing  the  currency  thus  contracted.  To  bring 
about  a  condition  of  depression  such  as  Mr.  Gage  suggests,  for 
the  purpose  of  making  bargains  in  our  securities  and  products 
for  the  benefit  of  foreigners,  would  be  resented  by  the  people 
injured  thereby  in  every  State.  The  very  thing  that  reduced 
securities  and  commodities  to  panic  prices  would  revive  the 
silver  mania,  on  the  belief  of  the  need  of  more  money,  and 
would  justify  foreign  capitalists  in  believing  that  this  country 
was  surely  going  to  drift  to  a  silver  basis.  If  once  they  believed 
that,  they  would  not  buy  our  securities,  however  low  in  price  ; 
but,  on  the  contrary,  the  lower  they  sold,  the  more  Europe  would 
liquidate  what  they  held.  That  was  the  experience  during 
the  last  silver  dementia.  The  taking  up  of  greenbacks  by  the 
government  would  of  course  save  the  United  States  Treasury 
from  being  exposed  to  the  suspension  of  gold  payments ;  but  it 
would  be  at  the  expense  of  the  national  banks,  as  it  would  take 
from  them  the  money  which  they  now  hold  for  their  reserves 
and  for  the  redemption  of  their  notes.  The  banks  in  times  of 
severe  depression  and  distrust  would  then  be  almost  sure  to  sus- 
pend gold  payments ;  besides,  as  soon  as  the  government  went 
out  of  the  legal  tender  currency  business,  the  national  banks 
would  immediately  begin  to  contract  their  circulation  rather 
than  be  exposed  sooner  or  later  to  a  default  in  payment  when 
gold  should  be  demanded  for  their  notes.  A  severe  depres- 
sion in  business,  such  as  Mr.  Gage  proposes,  would  surely 
elect  some  such  man  as  William  Jennings  Bryan  as  President 
of  the  United  States  in  1900.  We  had  better  "bear  the  ills  we 
have  than  fly  to  others  that  we  know  not  of." 


PART    III. 

WALL  STREET  AND   SOCIAL  PROBLEMS. 


CHAPTER    XXVII. 

THE  MASSES  AND  THE  CLASSES. 

No  room  for  jealousy  where  political  equality,  by  virtue  of  the  Declaration 
of  Independence  and  of  the  Constitution,  exists.  —  Sectional  hostilities 
and  class  animosities  should  not  be  fostered,  but  suppressed.  —  Errone- 
ous logic  of  those  who  want  to  get  rich  quickly. — The  evil  influence  of 
communism  and  socialism  on  the  body  politic.  —  Geographical  discrimi- 
nations to  be  repudiated.  —  George  Washington's  opinion  on  the  sub- 
ject.—  The  question  of  the  distribution  of  wealth  and  its  rapid  progress 
in  the  division  of  large  fortunes.  —  If  monopolies  rule,  whose  fault  is 
it  ?  —  Accumulation  of  capital  in  the  hands  of  a  few,  and  how  the  so- 
cialistic remedy  would  work.  —  Advice  to  those  who  want  to  get  rich 
rapidly.  —  Victims  of  soaring  ambition.  —  How  the  Gould  and  Vander- 
bilt  estates  are  distributed  effectually  without  the  aid  of  the  socialists. 

IT  is  peculiarly  deplorable  that  class  distinctions  should 
exist  in  this  country.  The  whole  idea  is  semi-barbarous 
in  its  character  and  unworthy  of  a  people  professing  advanced 
civilization.  It  is  a  feeling,  moreover,  that  a  man  should  be 
ashamed  to  acknowledge  on  cool  reflection,  for  the  reason  that 
it  detracts  from  his  own  dignity  as  an  American  citizen,  and 
deprives  him  in  part,  especially  in  the  eyes  of  foreigners,  of 
that  character  which  is  one  of  his  greatest  marks  of  distinction 
wherever  he  may  travel. 

Then,  too,  the  spirit  of  jealousy  displayed  against  the  East 
in  many  of  the  new  States  in  the  far  West,  because  of  the  dis- 
parity in  wealth  which  exists,  is  simply  absurd.  The  people 
who  cherish  that  animosity  forget  the  fact  that  the  Eastern 
people  have  had  over  a  hundred  years'  start  in  the  accumula- 

206 


THE   MASSES  AND   THE   CLASSES.  2O/ 

tion  of  wealth.  The  remoter  new  States  occupy  a  position  simi- 
lar to  that  which  young  men  just  commencing  life  hold  toward 
old  men  who  have  made  their  fortunes.  Such  starters  in  life 
should  not  become  dissatisfied  because  they  have  to  cope  with 
powerful  competitors.  In  assuming  this  attitude,  they  do  not 
take  into  account  that  the  older  men  have  given  three  score  or 
more  years  of  hard  work  to  the  accumulation  of  wealth,  and 
that  they  have  the  same  opportunities  to  accomplish  all  that 
the  older  ones  have  done,  providing  they  apply  themselves  to 
the  effort  with  equal  diligence.  With  the  equality  of  opportuni- 
ties in  this  country  that  most  men  possess,  why  should  there 
be  any  feeling  of  envy  simply  because  one  part  of  the  country 
has  had  a  hundred  or  more  years'  start  over  others,  and  has 
become  rich  in  comparison?  England  was  rich,  through  the 
accretions  of  many  centuries,  before  the  United  States  came 
into  existence.  Did  the  people  of  the  United  States  feel  ani- 
mosity toward  the  English  people  because  they  had  the  start 
of  them  in  money-making  by  many  generations  ?  Take  all  the 
great  fortunes  in  this  country  at  the  present  time,  —  they  were 
founded  by  men  on  the  common  level  of  all  the  people  and 
without  any  money  backing.  This  applies  to  the  Astors,  the 
Vanderbilts,  the  Goelets,  the  Mills,  the  Huntingtons,  the  Pull- 
mans, the  Rockefellers,  the  Carnegies,  the  Havemeyers,  and 
nearly  all  our  other  very  rich  men.  What  has  been  accom- 
plished by  them  can  be  accomplished  by  others  in  the  future, 
and  there  will  be  just  as  good  opportunities  to  make  money  in 
the  coming  generation  as  there  have  been  in  the  past. 

There  is  no  law  of  primogeniture  or  entail  in  this  country  by 
which  the  eldest  son  is  preferred  and  falls  heir  to  the  whole 
estate,  as  in  England  and  some  other  countries.  Here,  when 
the  head  of  the  family  dies  without  making  a  will,  the  property, 
after  his  debts  are  paid,  is  divided  equally  among  his  children, 
or  among  the  next  of  kin,  in  the  event  of  direct  issue  failing. 
If  he  makes  a  will,  he  cannot  do  exactly  as  he  pleases.  He 
cannot  tie  up  his  property  longer  than  for  the  life  of  the  sur- 
vivor of  two  lives  in  existence  at  the  time  of  making  his  will. 

The  necessity  for  this  restriction  in  the  law  of  wills  arose  out 


208         THE  WALL   STREET   POINT   OF   VIEW. 

of  the  case  of  the  will  of  Mr.  Thellusson,  a  London  merchant, 
who  lived  a  hundred  years  ago,  and  was  possessed  of  a  morbidly 
vain  desire  to  have  some  one  of  his  name  very  wealthy  in  the  dis- 
tant future.  He  died  worth  half  a  million  sterling,  leaving  three 
sons  and  three  daughters  to  whom  he  bequeathed  nothing,  and 
his  property,  according  to  the  will,  was  to  accumulate  for  a  cen- 
tury. As  he  died  in  1797,  the  Thellusson  heir  came  recently 
into  an  estate  which  exceeds  $500,000,000. 

Absurd  as  Mr.  Thellusson's  will  was,  the  trusts  which  it  cre- 
ated were  held  valid  by  the  Court  of  Chancery,  and  the  decree 
was  affirmed  in  the  House  of  Lords. 

Commenting  on  this  case  Chancellor  Kent  says,  — 

"  This  is  the  most  extraordinary  instance  on  record  of  calculating 
and  unfeeling  pride  and  vanity  in  a  testator,  disregarding  the  ease 
and  comfort  of  his  immediate  descendants  for  the  miserable  satis- 
faction of  enjoying  in  anticipation  the  wealth  and  aggrandizement 
of  a  distant  posterity." 

The  case  gave  occasion  to  the  Statute  of  39  and  40,  George 
III.,  Chap.  98,  prohibiting  thereafter  any  person,  by  deed  or 
will,  from  settling  or  devising  real  or  personal  property  for  the 
purpose  of  accumulation  beyond  a  limited  period ;  and  it  was 
upon  this  act  that  the  New  York  Act,  New  York  Revised  Stat- 
utes I.,  Chap.  773,  was  founded,  relating  to  the  restriction  by 
will  of  future  accumulations,  —  a  principle  which  holds  good  with 
slight  modifications  throughout  the  United  States.  It  will  thus 
be  seen  that  real  estate  cannot  be  kept  out  of  the  channels  of 
commerce  longer  than  the  ordinary  existence  of  a  generation, 
and  it  may  be  set  free  much  sooner,  as  life  is  uncertain. 

Now,  reflecting  further  on  these  malcontents  who  want  to  get 
wealthy  by  hops  and  bounds  without  going  through  the  hard 
preliminary  struggle  in  most  cases  absolutely  necessary  to  attain 
the  goal  of  this  ambition,  I  should  like  to  ask  some  young  and 
avaricious  upstarts,  who  are  probably  trying  hard  to  make  both 
ends  meet  on  salaries  ranging  from  ten  to  twenty-five  dollars  a 
week,  if  they  would  exchange  places  with  some  of  those  old  and 
wealthy  veterans  who  have  borne  the  brunt  of  life's  battle  up  to 


THE   MASSES   AND   THE   CLASSES.  209 

the  present  time.  Would  they  resign  their  youth  and  the  pros- 
pects of  the  enjoyment  incident  thereto,  and  assume  the  infirm- 
ities of  old  age  and  the  decay  that  indicates  proximity  to  the 
grave,  for  all  the  wealth  the  aged  millionaires  possess? 

A  common  observation  very  often  used  thoughtlessly,  when 
a  rich  man  happens  to  be  the  subject  of  discussion,  is,  "  I 
wish  I  had  his  money."  It  seldom  strikes  the  person  who 
utters  the  wish  that  there  is  any  dishonesty  implied  in  the 
expression  of  this  desire,  but  there  is,  whether  the  person  who 
utters  it  may  think  so  or  not.  The  idea  of  stealing  may  be 
very  far  from  that  person's  mind,  but  the  remark  will  often 
bear  the  interpretation  that  the  "  wish  is  father  to  the  thought " 
of  theft,  provided  security  from  punishment  were  guaranteed. 
This  is  all  wrong  in  a  well-regulated,  highly  civilized,  and  law- 
abiding  community. 

Another  loose  observation  of  an  analogous  character  is  very 
common,  especially  among  politicians.  When  people  are  dis- 
cussing the  subject  of  suddenly  acquired  wealth  by  a  certain 
individual  who  had  been  poor  prior  to  his  advent  in  politics  as 
a  leader,  perhaps  some  one  will  inquire,  "  Where  did  he  get 
it  ?  "  This  will  draw  out  further  remarks  as  to  the  only  pos- 
sible way  in  which  he  could  get  it,  and  some  one  will  indignantly 
denounce  such  a  corrupt  state  of  affairs  ;  but  immediately 
another  thoughtful  individual  will  speak  up  boldly  in  behalf  of 
the  accused  and  say,  "  I  don't  blame  him  if  he  was  clever 
enough  to  do  it."  A  number  of  others  will  very  likely  chime  in 
with  the  last  speaker,  and  Tom,  Dick,  or  Harry,  or  whoever  the 
fortunate  politician  may  be,  is  at  length  probably  absolved  by 
the  majority  of  that  coterie  who  candidly  acknowledge  that 
they  would  take  the  risks  of  going  to  state  prison,  if  they  only 
got  the  chance,  for  the  sake  of  the  "boodle  "  in  question. 

People  of  this  description  must  have  formed  the  subject  of 
the  poetic  thoughts  of  "  rare  Ben  Jonson  "  when  he  wrote  the 
following :  — 

"  He  that  for  love  of  goodness  hateth  ill 

Is  more  crown-worthy  still 
Than  he  who  for  sin's  penalty  forbears,  — 
His  heart  sins,  though  he  fears." 


210         THE   WALL   STREET   POINT   OF   VIEW. 

As  this  style  of  poetry  is  too  lofty  in  tone  to  reach  the  recep- 
tive faculties  of  the  class  under  consideration,  I  shall  quote 
another  couplet,  not  by  Ben  Jonson,  however,  but  better  suited 
to  their  capacity  and  more  to  the  point  as  a  solemn  warning :  — 

"  He  that  takes  what  isn't  his'n, 
When  he's  caught  should  go  to  prison." 

Regarding  the  evils  of  sectional  jealousy  and  kindred  feel- 
ings, Washington  said :  — 

"In  contemplating  the  causes  which  may  disturb  our  nation,  it 
occurs  as  a  matter  of  serious  concern  that  any  ground  should  have 
been  furnished  for  characterizing  parties  by  geographical  discrimina- 
tions,—  Northern  and  Southern,  Atlantic  and  Western,  —  whence 
designing  men  may  endeavor  to  excite  a  belief  that  there  is  a  real 
difference  of  local  interests  and  views.  One  of  the  expedients  of 
party  to  acquire  influence,  within  particular  districts,  is  to  misrepre- 
sent the  opinions  and  aims  of  other  districts.  You  cannot  shield 
yourselves  too  much  against  the  jealousies  and  heartburnings  which 
spring  from  these  misrepresentations.  They  tend  to  render  alien 
to  each  other  those  who  ought  to  be  bound  together  by  fraternal 
affection." 

Distinctions  are  frequently  made  between  "  the  masses  and 
the  classes,"  —  words  which  have  a  fine  sound  when  placed  in 
juxtaposition,  and  have  an  attractive  look  in  headlines,  but 
they  do  not  exist  as  solid  facts  in  the  contrast  intended.  They 
do  not  in  reality  imply  any  definite  meaning.  There  are  no 
classes  in  this  country  as  opposed  to  the  masses,  and  we  are  all 
one  mass,  at  least  all  citizens  are,  and  that  mass  is  composed 
of  an  aggregate  of  sovereign  citizens  of  this  great  Republic. 
The  name  "  sovereign  "  excludes  the  very  idea  of  having  any- 
thing above  it.  It  occupies  the  highest  possible  place  of  politi- 
cal eminence. 

As  regards  distinctions,  these  may  be  acknowledged  in  men- 
tal, moral,  and  social  qualifications,  but  not  in  the  political  status 
of  the  citizens  of  the  United  States.  We  are  all  equal  before 
the  law  just  in  the  same  sense  that  we  are  "  created  equal," 
according  to  the  language  in  the  preamble  of  the  Declaration 


THE   MASSES   AND   THE  CLASSES.  211 

of  Independence.  This  idea  alone  should  bury  in  unfathom- 
able oblivion  every  thought  of  class,  as  well  as  of  money  and 
geographical  distinctions,  and  we  should  heartily  adopt  the 
motto  "  Each  for  all  and  all  for  each,"  and  glory  in  the  idea  of 
one  united  people.  Negligence  of  this  advice  was  the  chief 
cause  of  the  Civil  War. 

Now,  I  am  strongly  of  opinion  that  the  spirit  of  socialism  and 
communism,  twin  relics  of  barbarism,  have  had  a  great  deal  to 
do  in  recent  times  with  the  feeling  of  jealousy,  class  distinction, 
and  dread  of  the  money  power  which  we  see  so  frequently  ex- 
hibited, and  which  if  not  checked  may  prove  deleterious  to  the 
industrial  and  social  interests  of  this  country.  There  is  no  true 
grievance  for  which  the  citizens  have  not  ample  redress  through 
the  ballot  box ;  and  when  they  complain  that  they  are  trampled 
upon  by  monopolies,  trusts,  and  political  bosses,  the  answer  is, 
It  is  your  own  fault.  The  people  who  have  votes  are  a  hun- 
dred times  stronger  than  all  these  other  forces  banded  together, 
with  all  the  money  that  such  a  powerful  aggregate  could  com- 
mand. They  are  competent  and  fully  equipped  to  defeat  the 
whole  army  of  trusts,  monopolies,  and  selfish  millionaires,  with 
the  communists  and  anarchists  at  their  back,  if  we  could  possi- 
bly imagine  such  a  heterogeneous  combination ;  for  the  latter 
elements  of  this  supposed  confederacy  have  no  votes,  as  a  rule, 
and  the  wealthy  members  only  occasionally  make  use  of  their 
privilege  of  voting. 

Surely,  this  accumulation  of  capital  is  not  an  unmixed  evil. 
But  for  capital  the  respectable  laboring  men,  and  even  those 
disorganized  nondescripts  without  classification,  would  be  far 
worse  off  than  they  are.  Labor  is  impotent  without  capital, 
and  it  will  never  be  able  to  acquire  capital  so  long  as  it  listens 
to  the  disorganizers  and  breeders  of  perpetual  discord. 

I  should  like  to  say  a  few  more  words  to  our  Western  breth- 
ren, especially  the  young  and  aspiring  ones,  on  the  subject  of 
trying  to  grasp  wealth  too  rapidly.  The  attempt  to  do  so,  in 
ninety-nine  cases  out  of  a  hundred,  ends  in  signal  failure. 
Durable  wealth  can  be  acquired,  as  a  rule,  only  by  the  method 
of-  slow  and  steady  accretions,  after  the  manner  of  constructing 


212          THE   WALL   STREET   POINT   OF   VIEW. 

a  coral  reef.  Of  course  there  are  eminent  exceptions,  but  these 
are  either  rare  instances  of  genius,  where  all  ordinary  rules  are 
largely  dispensed  with,  or  of  what  may  be  regarded,  for  want 
of  a  better  explanation,  as  good  luck.  Those  who  leave  the 
regular  path  with  such  hopes  will  be  almost  sure  to  be  disap- 
pointed, for  geniuses  in  finance  are  very  uncommon,  and  a  turn 
of  good  luck  may  not  come  except  at  very  long  intervals. 

But  young  men  need  not  despair  under  the  impression  that 
the  chances  to  become  wealthy  are  all  gone.  They  are  as  good 
as  ever.  Of  course  competition  is  sharper,  but  the  facilities  for 
meeting  it  are  better,  and  those  who  keep  pace  with  the  times 
and  improve  their  faculties,  just  as  the  old  men  had  to  do  in 
their  time,  have  brilliant  prospects  in  store.  If  the  end  is 
harder  to  attain,  the  means  are  better  suited  to  the  end ;  and 
we  have  the  experience  of  all  the  ages  to  draw  upon,  either 
for  the  purpose  of  enabling  us  to  improve  on  the  past,  or  by 
weighing  the  mistakes  of  others  to  help  us  to  avoid  similar  ones 
in  the  future,  and  to  keep  clear  of  the  rocks  and  shoals  upon 
which  former  victims  of  soaring  ambition  were  wrecked.  His- 
tory and  biography  are  the  great  charts  by  which  we  must  steer 
our  course  —  the  philosophy  that  teaches  by  example.  The 
trouble  in  the  use  of  these  instruments  is  that  we  do  not  benefit 
as  much  as  we  might  by  the  experience  of  others  until  we  apply 
it  to  our  own  personal  action,  and  then  it  may  be  too  late. 
Each  must  work  in  his  own  way  and  according  to  the  gifts 
with  which  he  is  endowed ;  and  he  must  proceed  rationally, 
thoughtfully,  and  with  premeditation.  "  Give  thy  thoughts  no 
tongue,  nor  any  unproportioned  thought  its  act,"  says  Polonius 
to  his  son  in  Hamlet.  Commodore  Vanderbilt  clothed  the 
same  idea  in  language  almost  as  terse,  though  less  grammatical. 
"  Never  let  nobody  know  what  ye're  goin'  to  do  till  ye  do  it," 
was  one  of  the  Commodore's  pet  maxims,  and  he  often  acted 
upon  it,  to  the  great  discomfiture  of  his  enemies  and  competitors, 
and  to  the  building  up  of  the  Vanderbilt  millions. 

The  main  objection  of  communists,  and  others  of  the  same 
bent,  to  present  conditions  is  on  the  score  of  the  unequal  dis- 
tribution of  wealth.  I  think  there  could  be  no  better  object 


THE   MASSES   AND   THE   CLASSES.  213 

lesson  on  this  subject  than  that  which  the  Vanderbilt  millions 
afford.  They  have  within  a  generation  been  transferred  from 
a  single  owner  to  probably  nearly  a  hundred  possessors,  either 
actually  or  in  immediate  prospect.  There  has  been  no  tying 
up  there.  So  it  was  with  Jay  Gould's  hoards.  They  are  rapidly 
coming  under  the  same  law  of  distribution,  and  even  Paris  is  enjoy- 
ing a  part  of  his  hard-earned  gathering,  when  the  accumulator 
of  it  all  has  been  but  a  few  years  dead.  Other  parts  are  being 
divided  up  among  workmen  in  various  industries,  while  certain 
amounts  are  expended  in  the  encouragement  of  art,  music,  and 
the  drama.  Within  a  few  years  those  hundred  odd  millions 
have  been  wrested  by  the  hand  of  death  from  the  original 
owner,  from  the  one  monopolistic  hand  and  put  into  the  hands 
of  dozens  of  liberal  distributers,  who  are  sowing  them  broad- 
cast. The  communists  themselves  could  hardly  do  the  work 
faster. 

If  Gould  himself  left  nothing  to  charity,  his  elder  daughter 
is  making  up  for  that  omission  by  devoting  a  large  portion  of 
her  life  work  and  a  liberal  amount  of  her  fortune  to  that  pur- 
pose. So  "  there's  a  divinity  that  shapes  our  ends."  Gould 
"builded  better  than  he  knew,"  —  for  the  world  and  for  the 
communists  also. 

If  Commodore  Vanderbilt  was  not  a  patron  of  letters,  having 
no  taste  therefor,  it  must  not  be  forgotten  that  he  did  a  great 
thing  for  the  Southern  University  by  his  bequest  to  that  institu- 
tion ;  and  other  Vanderbilt  charities,  such  as  the  Clinic,  must 
be  taken  into  account  in  this  important  question  of  distribution. 

This  natural  method  of  division  of  property,  unhampered  by 
primogeniture,  is  far  ahead  in  principle  and  in  equity  of  any- 
thing that  the  world  has  ever  seen.  Certain  socialists  eulogize 
the  Mosaic  law  of  distribution,  but  according  to  that  code  the 
division  and  reversion  took  place  only  every  fifty  years,  in  the 
year  of  jubilee.  Under  the  existing  methods,  which  are  con- 
stantly in  operation,  half  a  dozen  apportionments  may  take  place 
in  the  half  century,  and  the  diffusion  is  much  better  and  more 
equitable.  Certain  theorists  have  suggested  that  the  division 
to  fill  the  aching  void  should  be  made  during  the  mortal  exist- 


214         THE   WALL    STREET   POINT   OF   VIEW. 

ence  of  the  monopolists  and  bondholders ;  but  the  result  of  the 
experiment  made  in  this  direction  by  Mr.  Andrew  Carnegie 
would  seem  to  have  cast  a  damper  on  the  benevolent  senti- 
ments of  such  philanthropists.  Mr.  Carnegie  has  been  one  of 
the  best  abused  men  in  the  country  since  he  made  arrange- 
ments to  spend  millions  for  the  mental  and  moral  improvement 
of  the  people.  Public  ingratitude  is  a  great  enemy  to  benevo- 
lence, and  frequently  closes  the  door  against  it. 


CHAPTER   XXVIII. 

A  QUESTION  OF  GOOD   CITIZENSHIP. 

How  do  wealthy  men  compare  with  others  as  good  citizens  ?  —  Conditions 
that  antagonize  good  citizenship.  —  The  character  and  influence  of  the 
money  hoarder  and  the  absentee  analyzed.  —  Decline  in  the  rate  of 
interest  and  of  faith  in  the  Fecurity  of  property  among  the  most  important 
questions  of  the  day. 

SOME  time  ago  a  discussion  went  the  rounds  of  the  press 
on  the  subject  of  "  good  citizenship." 

Special  and  pointed  reference  was  made  to  the  distinctly 
wealthy  citizen,  to  the  man  who  had  become  conspicuous  in  the 
eyes  of  the  public  as  being  classed  among  the  millionaires ;  and 
the  opinion  seemed  to  be  held  by  not  a  few  that  wealth  has  a 
tendency  to  impair  a  man's  usefulness  as  a  citizen.  In  fact, 
some  people  are  disposed  to  think  that  a  rich  man  cannot  be 
a  good  citizen,  any  more  than  he  can  enter  the  kingdom  of 
Heaven. 

For  the  latter  opinion  we  have  the  highest  scriptural  authority, 
but  in  neither  case  would  it  be  justice  to  the  opinion  to  inter- 
pret the  language  literally.  The  Nazarene  simply  meant  that 
the  man  who  made  a  god  of  his  riches  could  not  enter  the  king- 
dom of  Heaven,  for  surely  no  one  can  imagine  that  Christ  would 
have  excluded  from  Heaven  such  men  as  we  see  in  our  times 
and  in  this  nation  spending  millions  in  charity  with  their  own 
hands,  and  make  provision  for  having  millions  more  spent  in 
the  same  laudable  cause  after  their  death. 

I  am  now  thinking  of  such  men  as  John  Rockefeller,  who  has 
already  spent  ten  or  twelve  millions,  and  Andrew  Carnegie,  who 
has  spent  probably  an  equal  amount ;  both  of  whom  pfopose 
to  spend  many  more.  In  the  same  honorable  catalogue  I  may 

215 


2l6         THE   WALL   STREET   POINT   OF  VIEW. 

include  the  Vanderbilts  and  many  others.  If  I  should  go  into 
the  list  of  the  deceased,  even  of  those  who  have  died  within 
my  own  recollection,  their  names  and  the  amounts  of  their 
bequests  alone  would  extend  this  chapter  far  beyond  the 
limits  allotted  to  it.  The  extent  and  number  of  the  charities 
of  the  late  Cornelius  Vanderbilt  will  probably  never  be 
known. 

Surely,  Jesus  of  Nazareth  never  meant  that  the  souls  of 
these  benevolent  individuals  should  wallow  eternally  in  despair, 
because  they  had  been  the  mere  instruments  of  collecting  large 
fortunes,  the  greater  portion  of  these  fortunes  being  distributed 
where  they  would  relieve  the  sufferings  of  humanity,  and  assist 
a  large  number  of  the  community  to  avail  themselves  of  a  higher 
state  of  mental  development  than  they  had  been  provided  with 
means  to  reach,  merely  by  the  accident  of  birth. 

Peter  Cooper's  gifts  and  bequests  afford  vivid  illustrations  of 
this  point.  Who  can  imagine  for  a  moment  that  Saint  Peter 
would  be  commissioned  by  the  Most  High  to  send  to  perdition 
his  philanthropic  namesake  because  the  modern  Peter  had  the 
prudence,  industry,  and  economy  to  gather  the  wealth  that  put 
the  institute  which  goes  by  the  grand  old  man's  name  on  such 
a  financial  footing  as  to  teach  thousands  to  earn  their  living  in 
intellectual  pursuits  who  otherwise  would  never  have  enjoyed 
the  means  of  raising  themselves  above  the  level  of  the  ordinary 
unskilled  day  laborer? 

Whatever  the  meaning  of  the  mysterious  Man  of  Nazareth 
might  have  been,  common  sense  rejects  the  brimstone  theory 
in  its  application  to  such  a  man  as  Peter  Cooper,  for  instance, 
though  he  was  not  what  was  regarded  in  his  day  as  an  orthodox 
Christian.  But,  like  another  eminent  man  in  his  school  of  faith, 
"  to  do  good  was  his  religion,"  though  unlike  the  other  he  did 
not  claim  "  the  world  as  his  country,"  although  in  every  sense 
it  was.  Peter  Cooper  was  peculiarly  and  characteristically  an 
American  of  the  old  school,  and  the  truest  type  of  genuine 
American  manhood. 

I  think  it  requires,  or,  at  least,  should  require  no  further 
argument  to  show  that  the  strictly  orthodox  interpretation  as 


A   QUESTION   OF  GOOD   CITIZENSHIP.  2 1/ 

applied  to  a  man  like  Peter  Cooper  is  unutterably  absurd  and 
can  be  entertained  only  by  unreasoning  fanatics. 

I  regard  the  opinion  of  the  reprobation  of  rich  men,  simply 
because  they  are  rich,  as  the  rankest  heterodoxy  against  the 
science  of  common  sense  and  the  best  interests  of  the  social 
condition  as  at  present  constituted  with  the  family  as  its  unit, 
in  contradistinction  to  socialism  and  a  paternal  government. 
The  wealth  accumulators,  I  contend,  are,  as  a  rule,  the  best 
citizens.  In  fact,  they  are  the  citizens,  above  all  others,  who 
make  it  possible  under  our  present  system  to  attain  the  highest 
enjoyment  and  development,  physical,  moral,  and  spiritual,  of 
which  mankind  thus  far  is  capable. 

How  far  these  wealth  accumulators  are  mere  automatons, 
working  through  the  media  of  apparent  selfishness,  is  a  question 
with  which  modern  philosophers  are  just  beginning  to  grapple  ; 
but  the  point  that  I  wish  to  make  clear  is  that  the  wealth  pro- 
ducers and  accumulators,  with  but  few  exceptions,  are  the 
hardest  worked  slaves  in  existence  and  have  on  the  whole  the 
least  enjoyment,  as  the  world  estimates  enjoyment,  out  of 
the  wealth  which,  in  common  parlance,  they  are  said  to 
create. 

Of  all  writers  on  political  economy,  John  Ruskin  puts  this 
condition  of  the  wealth-creator,  so-called,  in  the  truest  and 
most  vivid,  though  in  somewhat  a  ludicrous,  light.  He  takes 
the  position  that  the  error  in  the  popular  view  is  the  confusion 
of  guardianship  with  possession,  the  real  state  of  men  of  prop- 
erty being,  too  commonly,  that  of  curators  or  managers,  not 
possessors,  of  wealth. 

Of  the  man  of  wealth  viewed  in  this  light,  Ruskin  says  :  — 

"  He  cannot  live  in  two  houses  at  once.  A  few  bales  of  silk  and 
wool  will  suffice  for  the  fabric  of  all  the  clothes  he  can  ever  wear, 
and  a  few  books  will  probably  hold  all  the  furniture  good  for  his 
brain.  Beyond  these,  in  the  best  of  our  but  narrow  capacities,  we 
have  but  the  power  of  administering,  or  maladministering,  wealth. 
And  with  multitudes  of  rich  men,  administration  degenerates  into 
curatorship.  They  merely  hold  their  property  in  charge  as  trustees 
for  the  benefit  of  some  person  or  persons  to  whom  it  is  to  be  de- 


218         THE   WALL   STREET   POINT   OF  VIEW. 

livered  upon  their  death,  and  the  position  explained  in  clear  terms 
would  hardly  seem  a  covetable  one." 

And  again  :  — 

"  What  would  be  the  probable  feelings  of  a  youth,  on  his  en- 
trance into  life,  to  whom  the  career  hoped  for  was  proposed  in  such 
terms  as  these :  '  You  must  work  unremittingly  and  with  your  ut- 
most intelligence  during  all  your  available  years.  You  will  thus 
accumulate  wealth  to  a  large  amount,  but  you  must  touch  none  of  it, 
beyond  what  is  needful  for  your  support.  Whatever  sums  you  gain 
beyond  those  required  for  your  decent  and  moderate  maintenance, 
and  whatever  beautiful  things  you  may  obtain  possession  of,  shall  be 
properly  taken  care  of  by  servants,  for  whose  maintenance  you  will 
be  charged,  and  whom  you  will  have  the  trouble  of  superintending, 
and  on  your  deathbed  you  shall  have  the  power  of  determining  to 
whom  the  accumulated  property  shall  belong,  or  to  what  purposes 
it  shall  be  applied  '  ?  " 

And  yet  again  :  — 

"  The  labor  of  life  under  such  conditions  would  probably  be 
neither  zealous  nor  cheerful,  yet  the  only  difference  between  this 
position  and  that  of  the  ordinary  capitalist  is  the  power  which  the 
latter  supposes  himself  to  possess,  and  which  is  attributed  to  him  by 
others,  of  spending  his  money  at  any  moment.  This  pleasure  taken 
in  the  imagination  of  power  to  part  with  that  with  which  we  have  no 
intention  of  parting,  is  one  of  the  most  curious  though  commonest 
forms  of  the  eidolon  or  phantasm  of  wealth." 

Now,  if  Ruskin's  picture  is  a  true-to-life  portrait,  and  I  am 
inclined  to  think  it  is,  in  spite  of  what  to  some  people  might 
seem  its  humorous  exaggeration,  then  there  can  be  no  true 
reason  why  the  wealthiest  man  should  excite  envy.  In  fact, 
the  more  wealthy  the  less  enviable  is  he,  as  the  burden  of  his 
mere  trusteeship  is  the  heavier. 

As  a  general  rule,  and  not  forgetting  the  few  conspicuous 
exceptions,  the  man  who  is  wealthy  is  naturally  led  to  be  a 
good  citizen,  even  if  he  is  the  most  selfish  of  individuals.  His 
desire  to  increase  his  wealth  is  a  potent  cause  of  its  distribu- 
tion, in  which  operation  it  must  assist  those  who  assist  in  its 


A   QUESTION   OF   GOOD   CITIZENSHIP.  219 

circulation,  and  benefit  every  man  and  woman  through  whose 
hands  it  passes  as  the  medium  of  exchange  for  the  necessities 
and  luxuries  of  life. 

There  is  a  glaring  and  morbid  exception  to  this  rule.  That 
is  in  the  case  of  the  man  who  hoards  his  money,  thus  keeping 
it  out  of  circulation,  and  thereby  depriving  both  himself  and 
others  of  the  profits  and  increase  that  it  is  capable  of  bestow- 
ing when  prudently  invested.  Such  men  violate  the  law  of 
their  being  as  mediums  of  distribution.  Happily  they  are  rare, 
for  the  faculty  of  acquisitiveness  is  stronger,  after  all,  than  the 
mania  for  hoarding,  and  generally  overcomes  the  morbid  fear 
of  losing  what  they  have  in  the  risk  of  augmenting  it.  This 
passion  for  hoarding  strikes  at  the  root  of  national  prosperity 
by  retarding  the  growth  of  wealth,  which  is  usually  the  conse- 
quence of  investment ;  and  it  is  the  'duty  of  every  citizen,  in 
fact,  it  is  one  of  the  tests  of  good  citizenship,  for  the  successful 
man  to  share  his  prosperity  with  the  people  among  whom  he 
has  achieved  it. 

It  is  undoubtedly  true  that  wealth  brings  new  temptations, 
but  in  making  money  most  men  so  broaden  and  occupy  their 
minds  that  they  are  better  fitted  for  withstanding  those  temp- 
tations. 

As  far  as  national  wealth  is  concerned,  and  looking  at  the 
subject  from  a  patriotic  point  of  view,  —  which  is  absolutely 
necessary  in  discussing  the  question  of  citizenship,  unless  a  man 
claims  to  be  a  citizen  of  the  world,  —  the  chronic  absentee  is  a 
bad  citizen.  He  is  no  better  for  the  United  States  than  the 
English  landowners  are  for  Ireland,  and  he  stands  in  a  similar 
relation  to  his  fellow-citizens  as  those  rack-rent  landlords  do  to 
their  tenantry.  Each  draws  a  portion  of  the  life  blood  out  of 
his  respective  country  to  spend  it  in  luxuries  abroad. 

The  question  arises  then,  Is  a  man  justified  in  playing  uni- 
versal philanthropist  at  the  expense  of  his  compatriots  ?  Should 
the  latter  be  required  to  contribute  to  support  the  elegant  leis- 
ure of  a  person  who  has  ignored  them  as  fellow-citizens  ?  I 
know  there  is  no  law  at  present  against  it,  but  it  seems  to  me 
from  a  moral  standpoint  that  there  should  be  set  limits  to  the 


220         THE   WALL   STREET   POINT   OF   VIEW. 

extent  to  which  it  should  be  tolerated.  If  a  man  virtually 
de-citizenizes  himself,  should  he  be  permitted  to  retain  all  the 
rights  and  property  benefits  of  good  citizens  whose  constant 
aim  and  efforts  have  been  in  the  direction  of  the  best  interests 
of  the  country? 

It  seems  to  me  that  equity,  at  least,  should  require  an  extra 
tax  for  this  discriminating  indulgence.  We  have  passed  laws 
against  the  immigration  of  people  who  come  here  simply  with 
the  intention  of  earning  all  the  money  they  can  in  a  certain 
time  and  of  going  home  to  spend  it  there,  without  any  inten- 
tion of  assimilating  with  our  people,  or  assisting  to  build  up 
the  nation  in  return  for  benefits  received.  Are  they  any  worse 
than  these  habitual  absentees?  Hardly  so  bad,  I  should  say,  as 
they  do  not  owe  their  origin  and  birth  to  this  country.  Their 
procedure,  though  selfish,  is  not  unnatural. 

There  is  a  third  influence  at  work  which  is  antagonistic  to 
the  increase  of  wealth  in  this  country,  and  that  is  the  constant 
tendency  for  some  years  past  to  lower  the  rate  of  interest  for 
money.  To  discuss  this  subject  in  all  its  bearings  and  in  the 
numerous  variety  of  its  causes  would  require  an  entire  chapter ; 
but  one  thing  is  evident  in  our  social  and  political  conditions, 
and  that  is  that  "  populism  "  is  undermining  the  very  sources 
from  which  higher  rates  of  interest  were  formerly  drawn  by 
becoming  a  potent  instrument  in  rendering  the  status  of  society 
less  secure.  It  threatens  the  stability  of  property,  on  which  all 
security  is  founded ;  and  if  once  a  feeling  of  insecurity  should 
begin  to  spread,  it  would  give  rise  to  a  transfer  of  capital  to 
other  scenes,  where  social  and  political  conditions  were  less 
liable  to  change,  and  where  it  would  incur  less  risk  from 
the  fluctuations  of  property  values  and  incomes.  There  is 
nothing  regarding  which  people  are  so  sensitive  as  variations 
in  the  income  upon  which  they  are  obliged  to  rely  for  the  pur- 
pose of  supporting  a  certain  prescribed  social  status.  Anything 
calculated  to  disturb  this  equilibrium  makes  them  nervous  and 
exacting  as  to  the  nature  of  the  security  for  their  capital  and 
its  income. 

The   growing  populism   of   the   Democratic   party   in   this 


A   QUESTION    OF   GOOD    CITIZENSHIP.  221 

country  calls,  therefore,  for  the  most  profound  thought  of  our 
wisest  statesmen,  and  the  adaptation  of  the  best  measures  to 
avert  its  evil  influences.  To  establish  the  unquestionable  secur- 
ity of  property  and  income  is  one  of  the  most  important  ques- 
tions of  the  day  for  the  statesman  to  solve.  And  the  certain 
means  of  maintaining  that  security  without  liability  to  disturb- 
ance or  loss  of  confidence  therein,  is  a  question  which  all  good 
citizens  are  bound  to  consider  with  the  deepest  solemnity.  It 
goes  to  the  root  of  our  very  existence  as  the  great  Republic. 


CHAPTER   XXIX. 

LABOR   UNIONS  AND   ARBITRATION. 

Even  if  there  should  be  nothing  to  arbitrate,  the  arbitration  will  satisfy  pub- 
lic opinion.  —  Strikes  should  be  a  last  resort  only  against  unbearable 
grievances.  — The  public  are  victims  of  the  quarrels  which  they  are  inno- 
cent of  provoking.  —  How  arbitration  works  in  Stock  Exchange  affairs. 
—  Cooperation  the  true  method  of  escaping  the  despotism  of  "  bosses  " 
and  improving  the  condition  of  labor. 

r  I  "HE  first  part  of  the  following  paper  on  the  subject  of 
JL  "  Labor  and  Arbitration  "  was  written  at  the  request  of  the 
late  Henry  C.  Bowen,  editor  of  The  Independent,  several  years 
ago ;  and  as  similar  conditions  still  exist  in  the  field  of  labor, 
and  similar  troubles  constantly  arise  between  employer  and 
employe^  the  observations  and  comments  herein  are  as  appli- 
cable to  the  present  as  they  were  to  the  past. 

"  It  seems  to  me  that  in  all  differences  of  opinion  on  the  question 
of  wages  or  remuneration  for  labor,  between  employer  and  employed, 
arbitration  should  be  tried  in  the  first  instance  for  all  it  is  worth. 
There  may  be  nothing  to  arbitrate,  but  no  matter  for  that ;  it  will 
satisfy  public  opinion,  and,  in  my  opinion,  is  the  best  medium  for 
throwing  oil  on  the  troubled  waters. 

"  If  it  were  a  rule  recognized  by  both  employers  and  employed 
to  exhaust  all  the  possibilities  of  arbitration  with  becoming  patience 
and  mutual  forbearance,  before  ordering  a  strike  or  lockout,  I  be- 
lieve there  would  not  be  half  the  number  of  either  that  have  been 
experienced  during  the  last  few  years.  The  United  States  Strike 
Commission,  in  its  reports  on  the  Chicago  strikes,  briefly  pro- 
pounded two  courses  of  action  which  it  recommended  to  the  Ameri- 
can Railway  Union,  and  which  if  followed  out  to  their  ultimate 
consequences  would,  I  believe,  be  instrumental  in  preventing  more 
than  half  the  ordinary  troubles  : — 


LABOR  UNIONS   AND   ARBITRATION.  223 

<•"  First : —  To  take  a  position  against  all  strikes,  except  as  a  last 
resort  for  unbearable  grievances,  and  to  seek  the  more  rational 
methods  of  concilation  and  arbitration.  To  this  object  the  power 
of  public  opinion  would  lend  aid  to  an  extent  not  now  appreciated. 

"' Second:  —  Conservative  leadership,  legal  status,  and  the  edu- 
cation of  members  (of  trades,  unions)  in  governmental  matters, 
with  the  principle  in  view  that  in  this  country  nothing  can  accom- 
plish permanent  protection  and  final  redress  of  wrongs  for  labor  as 
an  entirety  except  conservative  progress,  lawful  conduct,  and  wise 
laws  enacted  and  sustained  by  the  public  opinion  of  its  rulers  —  the 
people.' 

"  Prior  to  the  accomplishment  of  all  that  these  two  comprehen- 
sive paragraphs  embrace,  more  than  one  campaign  of  education 
will  be  necessary.  In  fact  it  will  require  years  of  steady  and  per- 
severing educational  drill  to  arrive  at  the  ideal  of  this  commis- 
sion ;  but  it  is  the  only  sure  road  to  success,  and  though  it  will 
involve  much  weary  plodding,  the  goal  once  attained,  the  fatigue 
and  hardship  endured  will  be  amply  rewarded. 

"  Wherever  this  method  of  arbitration  has  had  a  fair  trial,  it  has 
worked  like  a  charm.  The  Stock  Exchange  affords  one  of  the 
best  examples  of  its  talismanic  power.  Misunderstandings  are 
settled  by  this  association  without  expense,  sometimes  in  a  few 
minutes  or  a  few  hours,  that  would  drag  their  weary  length  along 
from  one  to  two  or  three  years,  at  great  expense  and  incalculable 
vexation,  if  they  were  taken  into  a  court  of  law.  I  am  therefore  in 
favor  of  arbitration,  not  only  in  labor  disputes,  but  in  others  where 
criminal  proceedings  are  not  an  absolute  necessity. 

"  If  all  labor  unions  were  the  same  in  practice  as  most  of  them 
are  in  theory,  they  would  be  among  the  most  beneficent  institutions 
of  the  country.  In  proof  of  this  I  will  quote  a  sentence  or  two  from 
the  constitution  of  one  of  them  :  — 

" '  The  order,  while  pledged  to  conservative  methods,  will  protect 
the  humblest  of  its  members  in  every  right  he  can  justly  claim,  but 
no  intemperate  demand  or  unreasonable  propositions  will  be  enter- 
tained. Corporations  will  not  be  permitted  to  treat  the  organiza- 
tion better  than  the  organization  will  treat  them.  A  high  sense  of 
honor  must  be  the  animating  spirit,  and  even-handed  justice  the 
end  sought  to  be  obtained,  that  the  service  may  be  incalculably 
improved  and  that  the  necessity  for  strike  and  lockout,  boycott  and 
black  list,  alike  disastrous  to  employer  and  employed,  and  a  perpet- 
ual menace  to  the  welfare  of  the  public,  will  forever  disappear.' 

"  These  are  noble  sentiments,  clothed  in  appropriate  words  and 


224          THE   WALL    STREET    POINT   OF   VIEW. 

earnestly  meant ;  but  it  is  noteworthy  that  in  the  same  constitution 
there  is  not  a  word  to  be  found  imposing  punishment  or  any  kind 
of  discipline  for  infringement  or  violation  of  these  sentiments  by 
the  members  themselves.  This  the  commission  very  properly 
designates  '  a  grievous  omission,'  and  unfortunately,  such  omissions 
are  frequent,  and  will  be  so  until  a  more  thorough  education  in  the 
science  of  economics  shall  correct  them. 

"  I  am  now  called  upon  to  answer  the  question,  —  Should  associa- 
tions of  employers  organize  to  meet  the  demands  made  by  the  labor 
unions?  It  is  difficult  to  answer  this  question  in  full  without 
many  qualifications,  but  it  would  seem,  if  any  considerable  number 
of  labor  associations  are  united,  that,  unless  the  employers  are  also 
similarly  united,  the  principle  of  arbitration  could  not  be  placed  on 
an  equitable  basis  or  have  a  fair  trial.  In  the  case  of  managers  of 
railroads  there  is  a  special  difficulty  about  this.  They  are  not 
authorized,  it  seems,  by  their  charters,  to  form  corporations  or  asso- 
ciations to  fix  rates  for  services  and  wages.  Such  privileges,  it 
appears,  must  emanate  from  the  same  power  that  granted  the 
charters. 

"  The  most  important  question  connected  with  unions  and  strikes, 
however,  was  developed  in  its  most  glaring  monstrosity  in  the 
Brooklyn  trolley  strike.  There  the  poor  public  were  for  weeks  the 
innocent  victims  of  the  quarrel  which  they  had  no  hand  in  pro- 
voking, and  were  exposed  to  exhausting  fatigue  and  the  inclemency 
of  the  weather,  from  which,  no  doubt,  many  died,  while  there  were 
several  outbreaks  of  riot  and  consequent  bloodshed.  Such  distress, 
disgrace,  and  violence  might  have  been  averted  by  timely  arbitration. 

"  The  term  '  compulsory  arbitration '  is  frequently  used,  but  that 
seems  to  be  a  misnomer,  as  compulsion  and  arbitration  are  contra- 
dictions in  terms ;  but  the  blame  for  refusal  to  arbitrate  should  be 
placed  and  punished  in  some  manner. 

"In  conclusion  I  would  say,  without  partiality  to  either  employer 
or  employed,  never  say  'there  is  nothing  to  arbitrate,'  until  the 
committee  appointed  for  that  purpose  shall  render  its  decision." 

Since  the  events  to  which  the  foregoing  observations  refer,  I 
think  great  progress  has  been  made  toward  a  mutual  under- 
standing between  employer  and  employed  on  the  subjects  of 
labor  and  wages,  but  much  yet  remains  to  be  done. 

There  is  a  manifest  disposition  on  the  part  of  wage  earners 
to  become  more  of  an  organized  power  in  politics  and  to  free 


LABOR   UNIONS   AND   ARBITRATION.  225 

themselves  from  the  thraldom  of  the  political  "bosses."  The 
greater  headway  they  make  in  this  kind  of  reform,  the  nearer 
will  they  be  to  the  goal  of  their  main  purpose,  which  is  to 
settle  the  question  of  wages  upon  an  equitable  basis,  by  virtue 
of  which  the  capitalist  may  not  oppress  the  wage  earner  by  push- 
ing him  as  near  to  the  starvation  point  as  possible ;  nor,  on  the 
contrary,  may  the  wage  earner  insist  upon  remuneration  which 
would  reduce  the  capital  below  the  point  of  living  profits  with 
sufficient  surplus  to  preserve  intact  the  capital  from  which  the 
wage  fund  emanates,  and  without  which  wages  and  employment 
would  be  impossible,  and  bankruptcy  the  eventual  fate  of  the 
capitalist. 

I  know  this  is  a  very  difficult  point  to  settle,  as  was  amply 
demonstrated  in  the  Carnegie  strike  and  other  troubles  of  a 
similar  character,  each  side  holding  different  opinions  on  a  sub- 
ject that  should  be  easily  demonstrated  by  the  simple  rules  of 
arithmetic.  The  great  trouble  is  that  the  representatives  of 
both  labor  and  capital  are  prone  to  regard  the  matter  too  much 
from  their  own  respective  points  of  view.  Neither  party  seems 
to  have  the  capacity  to  imagine  itself  in  the  other's  place,  and 
when  it  does  sometimes  actually  get  there,  it  seldom,  if  ever, 
gives  any  better  satisfaction  than  its  predecessor. 

Workmen  and  artisans  will,  I  believe,  generally  testify  to  the 
fact  than  the  workman  or  the  artisan  who  happens  to  become 
a  capitalist  and  an  employer  is  the  hardest  kind  of  man  to 
get  along  with,  the  most  exacting,  the  most  tyrannical,  the 
least  lenient  to  the  faults  and  shortcomings  of  his  workmen, 
and  the  man  who  is  readiest  to  grind  them  down  in  wages  just 
as  close  to  the  starvation  point  as  they  can  possibly  endure. 
He  is  a  man,  also,  most  ready  to  discharge  them  on  the  least 
symptom  of  dissatisfaction  on  their  part,  even  if  he  has  to- 
supply  their  places  with  men  less  efficient,  but  more  servile 
and  subordinate.  He  conveniently  forgets  or  ignores  his  record 
when  he  was  a  laborer  himself,  and  was  perhaps  one  of  the 
loudest  declaimers  against  the  despotism  of  the  capitalists  and 
employers.  The  experience  of  the  workman  with  trades-union 
"bosses  "  is  similar.  There  are  of  course  many  employers  and 
Q 


226         THE  WALL   STREET    POINT   OF  VIEW. 

"  bosses "  who  have  risen  from  the  ranks,  far  removed  from 
any  of  these  contemptible  feelings  and  practices ;  but  the  class 
above  described  abounds  more  largely  than  superficial  observers 
imagine,  and  they  have  a  wretched  tendency  to  keep  the  work- 
man down,  and  to  crush  him  every  time  he  attempts  to  rise  a 
little  higher.  Therefore,  if  the  laboring  men  are  to  ameliorate 
their  condition  to  any  great  extent,  they  must  begin  by  reform- 
ing themselves. 

A  partial  cure  for  the  evils,  thus  apparently  now  inherent  in 
the  position  of  employer  and  the  office  of  "  boss,"  would  be 
found  in  a  more  extensive  system  of  cooperation,  under  which 
the  workmen  would  each  be  employer  and  employed,  capitalist 
and  wage  earner  in  one.  There  would  be  no  boss  authority 
except  that  delegated  by  the  workmen  themselves,  and  nobody 
to  blame  but  themselves  either  for  low  wages  or  bad  treatment. 

If  a  whole  nation  can  hold  together  and  be  prosperous, 
organized  on  the  principle  of  cooperation,  and  if  the  compo- 
nent parts  of  a  nation,  such  as  the  various  states,  counties,  and 
municipalities,  can  successfully  organize  on  similar  principle  and 
similar  lines,  it  would  seem  to  follow  logically  that  any  number 
of  sovereign  citizens  of  such  a  country  should  be  competent  to 
organize  themselves  in  a  similar  fashion  for  an  object  even  more 
closely  connected  with  their  welfare  than  citizenship  ;  namely, 
the  means  of  making  life  comfortable,  enjoyable,  and  worth 
living,  rather  than  a  disagreeable  burden,  and  a  perpetual  strug- 
gle for  a  poor  livelihood. 


CHAPTER   XXX. 

THE  PHYSICAL  FORCE  ANNIHILATORS. 

Several  species  of  this  genus,  including  socialists,  nihilists,  anarchists,  and 
communists.  —  A  retrospect  of  their  plans  and  purposes  for  the  regen- 
eration of  mankind  and  the  reconstruction  of  society,  after  going  through 
a  few  preliminaries,  such  as  the  suppression  of  rulers,  and  the  extinction 
of  capitalists.  —  According  to  the  programme,  the  scheme  will  imply 
wholesale  assassinations  and  universal  plunder  to  begin  with.  —  After 
purposes  indefinite.  —  A  problem  for  the  socialistic  reformers  as  pre- 
liminary to  success. 

THE  men  whose  peculiar  characteristics  and  purposes  I 
mean  to  discuss  in  this  chapter,  are  not  such  objects  of 
dread  as  their  name,  "  Annihilators,"  might  seem  to  indicate. 
The  safety  of  both  themselves  and  their  intended  victims  is  se- 
cured by  the  magnitude  of  the  task  they  have  undertaken,  com- 
pared with  the  paucity  of  the  means  proposed  to  accomplish  it. 

Their  proposed  scheme  is  nothing  less  than  the  annihilation 
of  society  and  its  reconstruction.  In  the  reconstructed  state  it 
is  presumed  that  everybody  will  be  able  to  enjoy  leisure,  after 
performing  about  an  hour's  easy  work  daily. 

"  Annihilator  "  is  a  generic  term  comprising  several  species, 
the  principal  of  which  are  communists,  anarchists,  and  nihilists. 
There  may  be  a  few  others,  but  they  are  of  minor  importance, 
and,  at  present,  I  shall  confine  my  remarks  to  those  named. 
They  wish  to  destroy  everything  and  to  build  up  anew.  This 
purpose  may  include  themselves  in  the  general  annihilation,  and 
they  may  think  that,  like  the  phoenix,  they  can  again  rise  from 
their  ashes,  —  a  supposition  not  more  preposterous  than  some 
of  the  feats  in  the  way  of  transforming  society  which  they  pro- 
pose to  achieve. 

The  annihilators  think  that  they  are  very  much  oppressed  in 

227 


228          THE   WALL   STREET   POINT   OF  VIEW. 

this  country,  but  they  are  under  a  delusion.  The  large  major- 
ity of  them  have  come  from  countries  where  the  people  are 
oppressed  by  military  rule,  and  where  the  one-man  power  is 
predominant ;  and  they  think  that  the  same  condition  of  things 
exists  everywhere.  They  do  not  pay  any  attention  to  the  study 
of  our  constitution  and  the  nature  of  our  government.  If  they 
did,  they  would  discover  that  there  is  no  place  in  the  world 
where  the  laws  and  institutions,  regarding  personal  liberty  and 
the  right  of  free  speech,  approach  those  of  this  country ;  and  no 
place  where  the  annihilators  themselves  would  be  afforded  the 
opportunity  of  earning  as  good  a  living  as  here.  The  enjoy- 
ment of  such  privileges  is  fully  demonstrated  by  the  fact  that 
but  few  of  them  are  in  our  prisons,  —  probably  not  any  greater 
proportion  than  there  are  of  our  other  citizens.  This  exemp- 
tion in  itself  is  a  privilege  they  could  not  enjoy  in  other  lands, 
as  many  of  them  know  from  hard  experience. 

If  they  would  only  conduct  themselves  decently  for  five  years 
after  arriving,  they  might  have  the  chance  of  rising  to  the  high- 
est positions  in  the  land,  except  that  of  president ;  and  their 
sons  born  here  would  be  eligible  even  for  that  eminent  office. 
There  is  no  other  place  in  the  world  where  such  aspirations 
find  any  such  encouragement  or  possibility  of  realization.  Yet 
this  country  is  probably  first  in  wealth,  second  in  area,  and 
third  in  population,  being  excelled  in  the  last  only  by  China 
and  Russia. 

Just  think  of  the  son  of  a  poor,  miserable,  starving  creature 
who  was  born  in  slavery,  under  the  heel  of  an  effete  despot  of 
Europe,  being  able  to  become  a  greater  executive  in  power 
and  influence  than  the  imperial  tyrant  whose  serf  his  father 
was  born  !  A  few  centuries  ago  an  historic  possibility  like 
this  would  have  been  read  in  Europe  like  a  fairy  tale,  classed 
with  such  stories  as  Cinderella  and  the  Glass  Slipper,  or  some 
of  the  tales  in  the  "  Arabian  Nights'  Entertainment." 

Such,  however,  is  the  ingratitude  of  human  nature,  that  the 
very  people  admitted  to  the  full  fruition  of  these  inestimable 
benefits,  purchased  by  terrible  struggles,  are  ready  to  turn, 
serpent-like,  and  destroy  the  social  and  political  fabric  reared 


THE   PHYSICAL   FORCE   ANNIHILATORS.         229 

at  so  much  expense  and  suffering,  and  which  munificently  con- 
fers the  great  boons  of  protection  and  sustenance  on  the  down- 
trodden portion  of  humanity  from  every  clime,  on  the  most 
agreeable  and  easy  terms. 

They  have  only  to  fall  in  with  our  facile  customs  and  benign 
laws  and  perform  a  sufficiency  of  manual  labor,  or  brain  work 
if  they  are  capable  of  it,  to  keep  their  bodies  and  minds  in  a 
healthy  condition.  In  return  for  this  they  are  fed  and  clothed 
better  than  some  of  the  nobility  whose  servants  they  were ; 
and  yet  they  are  not  happy.  Are  such  people  fit  for  freedom? 
Not  except  on  the  principle  laid  down  by  Macaulay,  who  said 
that  the  best  way  to  regulate  discontent,  arising  from  what  may 
be  considered  too  much  liberty,  is  to  grant  more  liberty. 
Macaulay  may  be  right,  but  he  never  had  European  annihila- 
tors,  transplanted  to  American  soil,  to  deal  with,  or  he  might 
have  thought  differently.  I  do  not  think,  however,  that  we 
have  anything  to  fear  from  these  destructive  elements  in 
human  form.  They  do  not  thrive  on  this  soil ;  they  are  not 
indigenous  to  it.  They  are  exotics,  and  poisonous  ones,  but 
the  fact  that  the  poison  is  labeled  in  sight  of  all  men  is  the 
best  protection  against  its  fatal  effects.  The  few  native  or 
naturalized  converts  that  these  pernicious  missionaries  may 
bring  over  to  their  way  of  thinking,  or  raving,  have  no  influence 
on  the  body  politic  in  general,  and  only  show  by  the  ease  with 
which  they  have  been  captured  that  they  are  not  qualified  to 
enjoy  and  exercise  the  prerogative  of  the  citizenship  bestowed 
upon  them.  Such  easy  subjects  to  the  hypnotic  influence  of 
the  annihilators  do  not  count  for  much  as  members  of  our 
political  system.  They  are  excrescences  upon  it,  and  have  to 
be  endured  in  accordance  with  our  generous  system  of  gov- 
ernment, by  which  drastic  measures  are  seldom  resorted  to 
except  in  the  last  extremity. 

This  mild  treatment  may  work  to  the  detriment  of  our  sys- 
tem in  some  instances,  on  the  principle  that  forgiveness  some- 
times only  encourages  sin  ;  but  the  country  is  strong  enough  to 
afford  a  large  measure  of  benevolence,  even  at  the  risk  of  hav- 
ing its  benignant  rule  of  action  imposed  upon.  The  rule  has 


230         THE   WALL   STREET   POINT   OF  VIEW. 

worked  tolerably  well  in  practice  for  over  one  hundred  years, 
and  it  would  hardly  be  prudent  to  change  it  except  in  the  face 
of  clearly  demonstrated  necessity. 

Germany  seems  to  have  been  the  birthplace  of  socialism,  but 
the  present  German  organizations,  and  especially  the  scattered 
portions  that  have  been  transplanted  to  our  soil,  have  departed 
materially  from  the  principles  held  by  the  older  brood  in  the 
fatherland.  The  latter  believe  in  prosecuting  their  ends  by 
constitutional,  semi-constitutional,  and  educational  methods ; 
but  the  new  brood  proposes  first  to  demolish  the  existing  sys- 
tem, and  that  without  anything  to  put  in  its  place.  These  peo- 
ple seem  to  think  that,  when  chaos  has  come  through  this  act  of 
demolition,  reorganization  on  a  basis  of  social  equality  will  be 
effected  in  some  mysterious  way.  When  the  question,  How  ? 
has  been  asked  at  any  of  their  big  conventions,  the  effort 
to  formulate  a  plan  has  frequently  ended  in  violence  among 
the  very  people  who  propose  to  organize  the  world  as  one 
happy  family  and  harmonious  brotherhood.  This  was  notably 
the  case  in  the  Congress  at  The  Hague  in  1872. 

Two  divisions  were  formed  out  of  that  secession,  one  called 
the  "Black"  and  the  other  the  "Red."  The  Blacks  were  the 
most  uncompromising  annihilators,  and  proposed  the  destruc- 
tion of  all  existing  governments  by  physical  force.  They  were 
the  full-fledged  nihilists,  and  took  their  name  from  the  Latin 
word  " nihil" — nothing,  or  "having  no  foundation  in  truth." 
The  latter  meaning,  given  in  the  Latin  dictionary,  seems  to  be 
peculiarly  significant,  as  the  system  itself  has  certainly  no  foun- 
dation in  truth ;  but  the  organization  which  had  itself  baptized  by 
this  name  evidently  meant  that "  nothing  "  should  remain  of  any 
government  when  they  got  through  with  it.  Their  special  field 
was  Russia,  where,  it  must  be  admitted,  they  have  worked  so 
as  to  make  their  influence  felt. 

The  "  Reds  "  were  inclined  to  work  by  constitutional  and 
educational  methods,  and  at  that  time  devoted  themselves 
chiefly  to  Germany  ;  but  their  idea  also  was  to  make  the  anni- 
hilating brotherhood  universal. 

The  nihilists  have  probably  not  been  so  powerful  or  compact 


THE   PHYSICAL   FORCE   ANNIHILATORS.        231 

for  the  purpose  of  general  mischief  in  Europe  since  that  dis- 
sension. At  that  time  the  crowned  heads  were  beginning  to 
stand  in  awe  of  them,  and  the  division  in  their  ranks  was  re- 
garded as  a  good  omen  by  the  royal  families  and  rulers  of 
Europe.  Bismarck  is  reported  to  have  said :  "  Crowned 
heads,  wealth,  and  privilege  well  may  tremble  should  ever 
again  the  '  Black '  and  the  '  Red '  unite." 

It  was  recently  reported  that  there  has  been  a  secret  reunion, 
and  also  that  the  more  rational  portion  of  the  annihilators  pro- 
pose to  make  the  United  States  a  camping-ground  and  prepara- 
tory field  where  the  sinews  of  war  can  be  collected  for  the 
purpose  of  overturning  the  thrones  and  decapitating  the  rulers 
of  Europe.  They  may  decide  on  using  this  country  for  that 
purpose  until  the  European  conquest  is  accomplished,  before 
turning  their  dynamite  on  us.  There  are  a  few  able  heads 
among  them  who  have  seen  military  service  on  the  other  side 
in  all  three  armies,  Russian,  French,  and  German.  There  are 
also  some  Italians  of  the  Carbonari  type,  and  a  small  sprinkling 
of  Spaniards,  but  very  few  English  or  Irish. 

Some  of  the  more  enthusiastic  ones  imagine  that  the  revolu- 
tion can  be  made  general  and  simultaneous  on  both  sides  of 
the  Atlantic  with  the  same  facility  that  the  telegraphers'  strike 
was  inaugurated  at  the  same  moment  all  over  the  country  a  few 
years  ago  by  a  whistle  in  the  Western  Union  Building.  These 
sanguine  annihilators  think  that  they  will  communicate  with  all 
their  centers  of  activity  through  land  and  cable  telegraph  at 
the  same  instant,  thus  giving  the  command  for  the  universal 
holocaust,  when  the  armies  of  Europe,  America,  and  Oceanica 
will  be  pounced  upon  mercilessly  and  become  the  prey  of 
dynamite,  no  quarter  being  allowed  except  to  those  who  are 
quick  to  embrace  the  destructive  tenets  of  the  annihilators. 

This  part  of  the  contract,  however,  is  considered  too  vast  by 
the  more  rational  leaders,  and  especially  by  the  "  Reds,"  who 
favor  the  tactics  of  dividing  and  then  conquering.  While  the 
"  Blacks  "  consider  the  old  method  too  slow  and  antiquated,  the 
"  Reds  "  think  it  is  better  to  make  sure  of  the  victory  even  at 
the  expense  of  a  little  delay,  than  to  take  risks  by  precipita- 


232         THE   WALL   STREET   POINT   OF  VIEW. 

tion.  The  anarchists,  too,  are  rather  inclined  to  be  on  the 
conservative  side;  but  the  nihilists  are  uncompromising,  and 
want  to  get  into  action  with  their  dynamite  bombs  and  the 
murderous  machinery  of  nitro-glycerine  on  the  very  shortest 
notice.  In  fact,  the  anarchists  seem  to  be  coming  back  to  the 
original  idea  of  their  organization  indicated  by  their  name, 
"  without  government,"  which  was  used  then  in  the  sense  that 
every  man  shall  be  a  law  unto  himself,  as  predicted  by  some  of 
the  old  prophets.  This  prophecy  has  yet  to  be  fulfilled,  for 
there  is  no  record  of  any  experience  of  its  realization.  It  is 
supposed  that  the  anarchists  might  have  tried  it  on  these  lines 
with  the  favorable  opportunities  offered  in  this  country  at  the 
time  of  the  Chicago  strike ;  but  Governor  Altgeld  of  Illinois, 
being  stronger  with  the  nihilists  than  with  the  anarchists,  was 
opposed  to  the  views  of  those  who  advocated  this  theory,  and 
they  had  to  succumb,  as  Altgeld  and  his  adherents  had  the 
"  pull "  in  politics,  and  were  bent  in  the  first  instance  on  the 
crippling  of  the  trunk  line  railroads. 

As  to  the  communists,  who  are  members  of  the  same  anni- 
hilating family  under  consideration,  there  has  been  little  heard 
of  them  since  the  sacking  of  Paris  after  the  German  invasion. 
From  this  long  quietude  of  the  commune  we  learn  a  lesson  of 
great  interest  and  significance  to  our  own  republic.  Annihi- 
lators  cannot  multiply  on  republican  soil.  It  is  too  rich  for 
them,  and  they  become  plethoric  upon  it ;  so,  in  order  to  avoid 
death  by  apoplexy  they  are  obliged  to  emigrate,  if  they  can 
find  any  place  on  earth  that  will  harbor  them.  If  they  cannot, 
they  await  their  inevitable  fate  where  they  are.  Sometimes 
they  even  see  the  error  of  their  ways,  reform,  and  become 
peaceable  citizens. 

John  Most  is  now  as  gentle  as  a  cooing  dove  and  seldom 
makes  an  inflammatory  speech ;  the  two  terms  in  prison, 
one  in  London  and  the  other  in  New  York,  cured  him.  And 
the  name  of  Justus  Schwab  of  this  city,  who  was  so  promi- 
nent a  few  years  ago  as  a  red-hot  socialist,  is  seldom  men- 
tioned. Why?  Simply  because  he  has  accumulated  some 
money  by  selling  beer,  sauerkraut,  and  quick  lunch,  and  now 


THE   PHYSICAL  FORCE  ANNIHILATORS.        233 

owns  some  real  estate,  including  the  house  in  which  he  lives. 
Consequently  he  is  unable  to  see  why  he  should  divide  up  the 
fruit  of  his  hard  earning  and  frugality  with  the  fellows  who 
spent  all  their  money  in  his  saloon,  while  he  was  collecting  it 
carefully  and  putting  it  in  property  to  be  divided  among  his 
children  when  he  goes  to  the  happy  hunting  grounds  of  the 
social  reformers.  He  encouraged  the  socialists  and  the  news- 
papers to  advertise  him  and  his  place  until  he  became  inde- 
pendent, and  then  he  did  not  have  much  use  for  either. 
The  socialistic  slate  has  been  broken  years  ago,  and  the  man 
who  used  to  proclaim  in  the  language  of  Prudhomme  that  "  all 
property  is  robbery,"  now  adheres  firmly  to  the  plunder  which 
he  was  then  amassing.  Justus  Schwab  is  a  whole  object  lesson  in 
himself,  when  the  fiery  Justus  of  seven  or  ten  years  ago  is  con- 
trasted with  the  sedate  and  tenacious  property  owner  of  the 
present  time. 

John  Swinton  is  another  of  those  who  have  been  careful  to 
adhere  to  a  fair  share  of  the  good  things  of  this  life,  and,  though 
he  has  been  fairly  consistent  and  has  contributed  according  to 
his  means  both  materially  and  intellectually  to  the  cause  of 
socialism,  yet  he  has  never  been  known,  I  believe,  to  let  his 
own  supply  of  loaves  and  fishes  run  short.  John  Swinton  has 
always  been  the  first  consideration  with  him.  Even  when  he 
started  a  newspaper  he  called  it  John  Swinton's  paper,  so  much 
was  he  in  favor  of  giving  John  the  preference ;  and  probably 
the  name  helped  to  kill  it,  for  socialists  are  very  jealous  about 
individual  honors,  though  their  theory  is  the  reverse. 

These  eminent  failures,  and  many  others  similar  in  kind,  go 
to  show  that  the  proposed  revolutionary  system  of  reform  must 
be  sadly  lacking  in  the  elements  of  cohesion,  popularity,  and 
permanency.  The  great  problem  which  these  reformers  have 
yet  to  solve  is  the  exclusion  of  the  selfish  principle  in  human 
nature.  In  that  they  have  apparently  made  very  little  head- 
way in  half  a  century,  and  without  this  solution  their  socialistic 
schemes  are  so  many  ropes  of  sand. 


CHAPTER   XXXI. 

THE  ANNIHILATORS'   METHODS. 

For  the  regeneration  of  society.  —  A  closer  examination  of  the  remedies 
which  the  various  destructive  fraternities  entitled  to  this  common  ap- 
pellation propose  for  the  inequality  complained  of,  and  how  they  would 
work  in  practice.  —  Where  will  they  get  the  men  to  help  them  to  de- 
molish thrones  and  break  up  present  political  organizations?  —  They 
could  put  down  the  present  tyranny  only  by  establishing  a  greater.  — 
Failure  of  all  previous  attempts  to  establish  communities.  —  Our  ballot- 
box  and  existing  law  are  ample  to  maintain  the  strictest  equality,  to 
remedy  all  wrongs  and  redress  all  grievances. 

IN  another  chapter  I  have  sketched  a  general  outline  of 
those  restless,  reckless,  and  revolutionary  spirits  who  may 
be  classed  under  the  general  appellation  of  "  annihilators." 
They  propose  to  abolish  private  property  and  suppress  the 
motives  for  its  acquisition.  Of  the  various  types  of  these  revo- 
lutionists the  only  kind  that  seem  to  have  a  clearly  thought  out 
and  analyzed  programme  of  reconstruction  after  the  destruction, 
are  the  scientific  socialists.  The  anarchists  and  nihilists,  as  a 
rule,  have  only  vague  ideas  of  the  detailed  course  of  action  of 
humanity  after  the  emperors  and  presidents  and  legislatures  and 
police  are  abolished ;  they  have  boundless  faith  in  luck  after 
the  universal  disintegration ;  but  they  make  no  provision  that 
the  same  things  which  they  now  hate  shall  not  happen  again. 
Therefore  it  seems  to  me  that  those  two  kinds,  anarchists  and 
nihilists,  are  to  be  regarded  by  sensible  people  only  as  pestilent 
disturbers,  who  deserve  no  respect  because  they  have  not  even 
a  plausible  programme  to  offer. 

But  socialists  have  a  pretty  well-arranged  plan  of  recon- 
struction. The  governmental  socialist  is  an  evolution  from 
the  early  communist ;  but  in  the  spirit  of  enforced  equality,  — 

234 


THE  ANNIHILATORS'   METHODS.  235 

equal  sharing  of  everything  without  regard  to  merit, — 
they  are  alike.  Let  us  begin  with  the  governmental  socialist, 
and  examine  the  programme  he  offers  us.  Those  who  hold 
his  views,  like  the  revolutionists,  propose  to  abolish  the  heads 
of  all  governments,  European  kings,  presidents,  and  governors 
of  states,  also  the  various  houses  of  legislation.  Then  they 
propose  to  establish  a  system  of  compulsory  equalization.  In 
their  own  words  they  mean  to  have,  "  instead  of  the  capitalistic 
and  individualistic  system  of  production  and  distribution,  a 
system  of  governmental  cooperation  and  governmental  pro- 
duction and  distribution.  The  whole  people  of  a  country  in 
their  collective  capacity  shall  produce  and  distribute  every- 
thing, like  a  great  joint  stock  company,  only  more  equitably." 
The  new  government  is  to  control  railroads,  telegraph  lines, 
and  all  kinds  of  industrial  forces.  In  this  scheme  there  will 
be  no  room  for,  or  incentive  to,  individual  enterprise.  Every 
person  is  to  work  under  no  other  stimulus  than  that  the  fruits 
of  his  labor  are  to  be  divided  equally  among  the  members  of 
the  community  to  which  he  may  belong. 

These  people,  while  making  high-sounding  statements  regard- 
ing the  happiness  sure  to  result  upon  the  adoption  of  their 
principles,  are  quite  reticent  as  to  the  means  for  effecting  the 
transformation,  although  it  is  to  be  the  most  radical  change  and 
on  the  largest  scale  that  has  ever  been  attempted.  "Socialism," 
they  say,  "  would  abolish  poverty  by  preventing  it,  by  removing 
its  causes.  As  poverty  is  the  cause  directly  or  indirectly  of 
nearly  all  crime,  therefore,  by  the  abolition  of  poverty,  crime 
would  become  almost  unknown,  and  with  crime  would  disap- 
pear all  the  'leeches,'  'vampires,'  and  'vermin'  that  fatten  on 
its  filth,  —  such  as  the  entire  legal  fraternity,  soldiers,  police, 
judges,  sheriffs,  priests,  preachers,  and  many  others." 

Now,  this  is  very  well  as  a  description  of  society  in  its  meta- 
morphosed condition,  but  how  we  are  to  get  there  is  another 
matter.  The  socialists  point  to  a  development  through  the 
trusts,  forgetting  that  between  the  largest  aggregation  of  com- 
mercial trusts  and  the  smallest  attempt  to  give  to  every  mem- 
ber of  the  community  an  equal  share  in  the  general  profits, 


236         THE   WALL   STREET   POINT   OF   VIEW. 

there  is  a  great  gulf  to  be  jumped.  Not  one  of  the  four  lead- 
ing species  of  annihilators  gives  any  satisfactory  explanation  of 
this.  They  all  seem  to  take  it  for  granted  that  the  only  thing 
necessary  will  be  to  send  around  the  cards  of  the  new  candi- 
dates for  the  committee  on  reorganization,  and  the  latter  will 
be  elected  unanimously.  No  allowance  seems  to  be  made  for 
the  possibility  of  any  opposition  to  the  new  regime.  It  is 
thought  to  be  so  attractive  in  its  nature  that  everybody  must 
irresistibly  embrace  its  doctrine  the  moment  it  is  presented  to 
them. 

Why  the  reformers,  or  rather  the  upsetters,  have  a  right  to 
expect  this  sudden  change  in  human  nature  is  not  stated.  It 
is  not  considered  necessary  to  state  it.  It  is  one  of  those 
things  that  are  supposed  to  be  self-evident.  Yet  when  one 
begins  to  canvass  the  opinions  of  the  community  anywhere, 
he  finds  that  this  change,  or  rather  transformation  of  mind, 
and  this  desire  for  another  condition  of  society,  have  very 
few  adherents.  There  is  not  one  person  in  twenty,  or  perhaps 
in  a  much  greater  number,  who  would  not  set  the  individual 
down  for  a  crank  or  a  crazy  person  who  began  to  talk  on  the 
subject  of  the  impending  revolution  and  the  new  state  of  society 
and  politics,  where  nobody  would  desire  to  get  the  money  he 
earned,  but  would  be  willing  to  have  it  put  into  a  general  fund 
to  be  divided  equally  at  the  times  set  apart  for  such  division. 
It  is  safe  to  say  that  not  one  out  of  a  thousand  would  listen 
for  a  moment  to  any  such  extraordinary  arrangement  for  the 
disposal  of  the  fruits  of  his  or  her  labor. 

Where,  then,  are  the  converts  to  the  new  regime  to  come 
from  ?  Can  the  annihilators  manufacture  them  ?  When  Mar- 
shal Ney  sent  to  Napoleon  for  more  men  at  Waterloo,  the 
answer  of  the  chief  was,  "  Does  he  expect  me  to  make  them  ?  " 
The  annihilators  seem  to  have  some  such  expectation.  They 
appear  to  think  that  some  unseen  power  will  make  these  men 
to  order,  fully  imbued  with  the  ideas  of  a  new  dispensation, 
and  prepared  to  enforce  it  despotically  upon  society  as  it  exists 
at  present. 

That  the  change  proposed  is  not  adapted  to  the  nature  of 


THE  ANNIHILATORS'   METHODS.  237 

mankind,  as  the  latter  has  existed  from  time  immemorial,  will 
be  readily  understood  if  we  go  back  a  few  thousand  years  to 
the  patriarchal  age  when  people  lived  in  tribes.  This  was 
communism  on  a  small  scale,  and  if  it  had  been  consonant  with 
human  nature  to  adapt  that  mode  of  existence  to  a  larger  scale, 
then  was  the  most  appropriate  time  to  begin  the  operation. 
But  instead  of  this  being  the  social  purpose  at  the  period  in 
question,  the  tendency  was  all  the  other  way.  This  may  have 
been  owing  to  the  perversity  of  human  nature,  its  general  in- 
ability to  discern  what  is  for  its  best  interests,  and  its  natural 
proneness  to  evil;  but  it  is  a  "condition,  and  not  a  theory, 
which  confronts  us,"  and  in  considering  this  question  in  all 
its  bearings,  we  are  obliged  to  take  both  human  nature  and 
society,  as  at  present  constituted  and  as  it  formerly  existed,  in 
the  concrete,  not  the  abstract.  In  other  words,  we  are  obliged 
to  take  it  in  the  most  practical  sense  in  which  any  scheme  of 
organization  or  reorganization  must  deal  with  it.  We  may 
people  the  world  with  imaginary  beings,  and  work  out  Utopian 
theories  for  our  own  amusement  and  the  entertainment  of 
others  who  delight  in  that  kind  of  theorizing ;  but  in  practical 
life  such  theories  will  prove  of  the  most  delusive  character,  and 
leave  us  eventually  the  sorry  victims  of  our  own  folly  and  over- 
heated imaginations. 

One  of  the  most  interesting  features  of  the  proposed  new  social 
state,  in  which  everybody  is  to  be  supremely  happy  in  the  thought 
that  he  is  working  for  the  benefit  and  maintenance  of  everybody 
else,  is  the  currency  idea.  This  part  of  the  programme  out- 
shines anything  that  has  been  suggested  by  either  silverites  or 
Populists.  It  is  to  be  a  new  currency,  of  course,  based  upon 
the  credit  of  the  new  state.  The  material  has  not  yet  been 
agreed  upon,  but  it  will  be  neither  of  the  precious  metals. 
These  are  tabooed,  and  the  unit  of  value  to  start  with  will  be 
a  hundred  minutes  of  labor  for  one  dollar,  or  a  cent  a  minute 
when  the  minutes  are  fewer  than  a  dollar's  worth,  and  there  will 
be  no  means  of  measuring  the  quality  or  quantity  of  labor  per- 
formed except  by  the  conscience  of  the  laborer. 

Nothing  is  to  be  taken  note  of  except  the  time,  and  it  is 


238          THE   WALL   STREET   POINT   OF   VIEW. 

to  be  left  to  the  good  will  and  option  of  the  individual  him- 
self whether  he  works  or  "  loafs."  As  he  will  get  as  much 
for  one  as  for  the  other,  there  can  hardly  be  two  opinions 
as  to  which  any  but  a  very  few  conscientious  ones  will  choose. 

Here  again  the  presumption  is  that  all  people  will  be  con- 
scientious philanthropists. 

This  is  presuming  an  entire  change  in  the  feelings  and 
desires  of  the  beings  who  are  to  be  citizens  of  the  New  Utopia, 
and  an  utter  absence  of  every  incentive  and  motive  which  now 
prompts  the  individual  to  labor  and  lay  up  for  the  future.  It 
is  easy  to  see  that  such  a  condition  of  things,  if  possible,  would 
stop  all  development,  and  a  state  of  stagnation  would  be  the 
inevitable  result.  Then  for  generations  there  would  be  per- 
petual war  between  the  rising  generation  and  that  which  would 
then  be  passing  away  after  having  introduced  these  felicitous 
changes  in  human  economy.  The  transmission  of  the  selfish 
ideas  of  the  old  Adam  would  be  certain  to  come  up  from  time 
to  time  in  the  younger  offspring,  thus  perpetually  disturbing 
the  harmony  of  society.  No  power  could  suppress  this  evil 
tendency  for  many  generations,  as  it  is  inherent  in  human 
nature  itself  and  one  of  the  mysteries  hitherto  beyond  the  reach 
of  solution.  With  a  finer  development  and  the  entire  suppres- 
sion of  selfishness,  the  secret  may  be  discovered  and  the  prob- 
lem solved  by  some  philosopher  of  the  future  school  of  thought. 

But  here  again  we  are  met  with  another  difficulty,  when  we 
speak  or  think  of  development  of  thought.  How  can  such 
a  thing  exist  in  the  sphere  of  the  annihilators'  future?  It  would 
be  entirely  superfluous.  "  Eat,  drink,  and  be  merry,  for  to- 
morrow we  die,"  would  be  the  motto  of  that  social  state.  The 
only  serious  consideration  would  be  to  get  sufficient  work  out  of 
the  members  of  the  community  to  maintain  the  eating  and  drink- 
ing. The  chief  incentive  to  work,  namely,  profit,  having  been 
taken  away,  what  kind  of  pressure  would  supply  its  place  so  as 
to  keep  the  various  communities  up  to  the  point  of  sustenance  ? 
It  must  be  remembered  that  the  "  robber  class"  who,  from  the 
most  selfish  purposes,  now  deal  in  futures  and  thereby  lay  up 
stores  against  famine,  would  all  be  extinct.  Thus  far  there  has 


THE   ANNIHILATORS'   METHODS.  239 

been  no  provision  made  to  supply  their  place  in  the  provisional 
work  which  they  now  perform  by  the  law  of  natural  selection. 

Suppose  that  on  the  brink  of  a  crisis  of  this  kind  the  com- 
munities should  take  a  notion  to  go  on  a  strike,  being  prompted 
by  a  spirit  similar  to  that  which  of  old  seized  the  Israelites 
when  Moses  restricted  them  to  a  manna  diet  and  they  longed 
for  the  "  fleshpots  of  Egypt,"  —  what  method  of  discipline 
would  be  resorted  to  in  such  an  emergency  ?  It  seems  to  me 
that  people  would  be  placed  in  such  a  quandary  that  they 
might  be  obliged  to  cast  lots  and  resort  to  a  tiding-over  experi- 
ment in  the  way  of  cannibalism  until  the  clouds  of  famine  should 
roll  by  and  the  demoralizing  influences  of  the  food  panic  pass 
over. 

Then  the  selfish  spirit  of  the  forefathers  would  begin  to  rebel, 
and  by  and  by  get  uppermost,  involving  the  biggest  insurrection 
that  the  world  has  ever  seen. 

Now,  I  have  taken  one  illustration  from  ancient  history,  that 
of  the  tribal  organization,  to  show  that  the  communistic  idea 
was  wanting  in  the  seeds  and  attributes  of  permanency.  The 
system  evidently  had  not  come  to  stay  with  those  good  people, 
and  they  did  not  transmit  it  to  their  modern  posterity,  who  have 
embraced  the  selfish  marriage  of  man  and  wife,  together  with 
their  other  backslidings.  The  family,  as  understood  by  the 
ancients,  being  simply  a  modification  of  the  tribe,  no  longer 
exists  in  the  civilized  portions  of  the  globe.  It  is  still  extant 
in  China,  and  also,  with  various  modifications,  in  other  East- 
ern nations  and  among  certain  tribes  of  Africa ;  but  wherever 
its  existence  lingers,  one  of  its  characteristics  is  that  the  people 
are  poor  and  ignorant.  It  was  tried,  and  in  course  of  time 
rejected,  by  a  few  of  the  ancient  nations  who  stood  highest  in 
the  scale  of  what  we  understand  by  civilization ;  but  it  is  signif- 
icant that,  as  the  idea  died  out  after  various  experiments,  people 
began  to  grow  more  humane,  and  what  is  designated  "  civiliza- 
tion," for  want  of  a  better  term,  developed  among  them.  They 
began  to  improve  in  their  habits,  a  higher  standard  of  morality 
began  to  prevail,  domestic  comforts  were  improved,  more  even- 
handed  justice  was  dispensed,  and  provision  against  the  emer- 


240         THE   WALL   STREET   POINT   OF  VIEW. 

gencies  of  life  became  a  subject  of  personal  and  individual 
concern,  and  conduced  largely  to  a  higher  dispensation  of 
happiness  in  the  "  selfish  "  family  circle.  Under  this  progres- 
sive state  of  evolution  great  discoveries  have  been  made,  for 
which  there  could  be  no  inducement  in  a  socialistic  system. 
And  the  world,  especially  the  republican  portion  of  it,  is  making 
considerable  progress  toward  the  highest  plane  of  happiness 
and  prosperity  ever  dreamed  of,  except  by  annihilators. 

In  quoting  instances  and  illustrations  of  historical  experi- 
ments in  communism  and  socialism,  there  is  one  that  should 
not  be  passed  over  in  silence,  as  it  is  probably  one  of  the 
most  prominent  of  examples,  and  the  only  successful  one. 
The  community  to  which  I  refer  was  that  formed  on  the 
day  of  Pentecost,  of  which  the  record  is  found  in  the  New 
Testament,  in  the  second  chapter  of  the  Acts  of  the  Apostles. 
It  seems  to  have  been  organized  by  the  twelve  apostles,  on  the 
occasion  of  a  meeting  in  Jerusalem  to  promote  the  spread  of  the 
gospel.  There  was  a  large  assemblage,  composed  of  the  repre- 
sentatives of  various  nations,  many  of  them  Jews,  mostly  dwellers 
in  Jerusalem,  then  the  metropolis  of  Palestine.  According  to 
the  narrative  written  by  St.  Luke,  the  assemblage  was  touched 
by  a  miracle  which  caused  the  disciples  to  speak  in  the  tongues 
of  the  foreigners.  Some  of  the  audience  were  astonished,  and 
were  curious  to  know  the  meaning  of  it,  while  others  mocked 
and  said,  "  These  men  are  full  of  new  wine."  The  Apostle 
Peter,  however,  sustained  the  theory  of  the  miracle  in  a  power- 
ful sermon,  and  a  large  number  of  the  people  must  have  agreed 
with  him,  for  he  succeeded  in  organizing  an  association  or 
church  of  three  thousand  members,  the  result  of  the  initiation 
being  the  sale  of  everything  that  the  person  possessed,  the 
proceeds  to  be  put  in  a  common  fund,  and  the  members  of  the 
community  —  "all  who  believed"  —  to  have  "all  things  in 
common."  The  narrative  goes  on  to  say  that  these  people 
"  sold  their  possessions  and  goods  and  parted  them  to  all  men 
as  every  man  had  need,"  and  furthermore,  that  "the  Lord 
added  to  the  church  daily  such  as  should  be  saved." 

Now,  this  community  was  established  under  what  must  be 


THE   ANNIHILATORS1   METHODS.  241 

considered  the  most  favorable  auspices,  and  under  divine  pro- 
tection and  guidance  ;  yet  there  is  no  account  that  I  have  seen 
or  heard  of  concerning  the  prolongation  of  its  existence  beyond 
a  short  period. 

Where  the  church  or  community  organized  by  the  Apostle 
Peter  and  his  eleven  holy  brethren  of  the  same  community 
did  not  succeed  in  transmitting  that  system  to  posterity,  what 
chance  is  there  for  miserable,  wicked  creatures,  who  are  con- 
stantly breathing  fire  and  slaughter  against  capitalists,  to  estab- 
lish a  permanent  organization  of  a  communistic  character  that 
has  any  guaranty  of  becoming  a  popular  success? 

To  put  the  question  thus  clearly  and  plainly,  is,  I  think,  to 
answer  it.  There  cannot  possibly  be  any  hope  of  such  an  ex- 
periment succeeding  in  a  civilized  community,  and  its  success, 
if  possible,  would  institute  the  worst  system  of  slavery  with 
which  the  world  has  ever  been  cursed.  It  could  not  be  organ- 
ized in  the  first  instance,  except  by  the  strongest  and  most  cruel 
kind  of  tyranny.  It  would  relegate  humanity  to  a  state  of  the 
most  selfish  savagery. 

All  the  modern  experiments,  likewise,  have  failed,  and  most 
of  them  were  of  a  mild  and  civilized  character.  Robert  Owen, 
a  Welshman  who  made  a  fortune  in  the  cotton  trade,  spent 
about  a  quarter  of  a  million  dollars  in  eleven  experiments  in 
attempting  to  establish  communism  by  rational  methods,  and 
through  reason  and  education.  One  of  these  was  New  Har- 
mony in  Indiana.  His  son,  Robert  Dale  Owen,  who  had  been 
induced  for  a  time  to  assist  his  father  in  these  abortive  attempts 
to  transform  human  beings  into  the  similitude  of  angels,  gave 
up  the  business,  became  an  ordinary  member  of  civilized  society, 
and  put  his  very  liberal  education  and  bright  intellect  to  use- 
ful purposes  as  an  author  and  a  magazine  writer.  He  also  had 
a  short  but  honorable  career  in  Congress,  and  died  in  1877, 
deeply  lamented  by  a  large  circle  of  friends  and  admirers. 
His  father  died  in  1858,  at  the  age  of  eighty-seven,  after  hav- 
ing spent  fifty  years  and  $300,000  in  the  unsuccessful  effort  to 
establish  communism  on  a  healthy  and  permanent  basis. 

Robert  Owen  was  a  great  philanthropist,  highly  respected  in 


242          THE  WALL   STREET   POINT   OF   VIEW. 

the  highest  circles  in  England,  and  a  special  favorite  with  the 
royal  family  there,  despite  his  radicalism.  He  once  lent  Wil- 
liam IV.,  Victoria's  uncle  and  predecessor,  ;£  10,000,  and  when 
the  king  handed  him  a  promissory  note  for  the  amount,  he 
threw  it  in  the  fire.  When  men  of  such  high  purposes  and 
plenty  of  money  to  back  them  up  fail  to  succeed  in  the  experi- 
ments under  consideration,  what  must  be  the  fate  of  men  whose 
theoretical  morals,  at  least,  are  of  the  lowest  type,  and  who  have 
no  money  to  put  any  enterprise  under  way  —  hardly  enough 
even  to  print  their  inflammatory  and  traitorous  platforms  ? 

These  people  talk  about  defending  the  laborer  while  they 
propose  to  rob  the  capitalist,  apparently  forgetting  that  capital  is 
the  fruit  of  labor,  and  is  quite  as  necessary  as  labor  in  any  plan 
of  cooperation,  large  or  small.  Man  in  his  present  state  of  civil- 
ization is  more  helpless  without  capital  than  a  wild  monkey  of 
the  forest ;  and  capital  cannot  be  preserved  and  increased  to 
the  point  of  doing  its  greatest  possible  good  and  reaching  its 
highest  aims  and  purposes  without  the  cooperation  of  its  natu- 
ral ally,  labor.  There  should  be  no  disruption  or  discord,  there- 
fore, where  such  vital  interests  are  mutually  indispensable  to 
the  health,  happiness,  and  prosperity  of  the  whole  people. 

Neither  the  system  of  Owen,  nor  that  of  Fourier  the  French- 
man, seeks  the  destruction  of  any  property,  but  rather  the  build- 
ing up  of  it.  The  destructive  idea  is  quite  modern.  The 
Fourier  system  was  tried  in  this  country  on  Brook  Farm,  at 
Roxbury  near  Boston,  Massachusetts,  from  1841  to  1846,  and 
several  of  the  most  prominent  literary  personages  of  a  little 
over  half  a  century  ago  went  through  the  mill  of  experience 
on  this  famous  farm.  Among  them  were  Horace  Greeley, 
George  William  Curtis,  William  Ellery  Channing,  George  Rip- 
ley,  Albert  Brisbane,  and  Charles  A.  Dana.  These  men,  with 
a  few  clever  women  (of  whom  Margaret  Fuller  was  one),  as 
might  be  expected  from  their  high  intelligence  and  honesty  of 
purpose,  soon  demonstrated  the  futility  of  the  experiment  and 
gave  it  up.  Brisbane  was  probably  the  only  one  who  adhered 
tenaciously  and  publicly  to  the  opinions  and  platform  of  Fourier 
after  the  farming  experiment  failed.  He  translated  Fourier's 


THE   ANNIHILATORS1   METHODS.  243 

works  and  wrote  books  and  comments  upon  them  until  near 
the  time  of  his  death  a  few  years  ago.  Fourier  died  in  1837, 
leaving  a  host  of  disciples  on  both  sides  of  the  Atlantic,  who 
are  now  nearly  all  dead.  Brisbane  was  probably  the  last  of 
the  enthusiastic  ones  on  this  side. 

Those  communities  that  have  been  organized  on  the  osten- 
sible foundation  of  religion  have  had  fair  material  success  dur- 
ing the  lives  of  their  leaders  and  organizers,  but  the  gross 
immorality  which  has  characterized  most  of  them  soon  planted 
the  seeds  of  their  decay,  and  the  successors  of  the  original 
leaders  were  seldom  able  to  continue  the  full  authority  be- 
queathed to  them.  This  has  been  the  result  with  the  Oneida 
Community  experiment  at  Oneida,  New  York,  over  which  a 
man  named  John  Noyes  ruled  with  a  rod  of  iron  for  many 
years.  After  his  death  the  community  collapsed.  The  Salt 
Lake  experiment  in  Utah,  organized  by  Joseph  Smith  and 
Brigham  Young,  has  been  handicapped  by  the  strict  execution 
of  the  laws  passed  by  Congress  against  polygamy.  Young  was  a 
man  of  extraordinary  personal  power,  with  great  individuality  and 
marvelous  magnetic  influence  over  his  deluded  followers.  He 
found  Utah  a  barren  wilderness  and  left  it  a  fertile  garden. 
He  built  a  temple  larger  than  that  of  his  polygamous  proto- 
type, Solomon,  although  the  gold  was  hardly  so  abundant 
in  the  Utah  structure  as  in  the  sacred  edifice  of  Lebanon 
built  by  the  wise  king  of  Israel.  At  last  the  nation  became 
disgusted  with  the  whole  system,  and  suppressive  enactments 
were  passed  by  Congress  designating  polygamy  a  crime. 

My  strictures  as  to  immorality  do  not  apply  to  the  Shakers, 
who  have,  perhaps,  come  nearer  to  success  than  any  modern 
movement.  Even  they,  however,  lack  vitality  and  are  rapidly 
dying  out. 

One  of  the  great  elements  of  disintegration  in  all  of  these 
efforts  to  organize  a  community  on  a  permanent  basis  arises 
from  the  dissatisfaction  inseparable  from  the  idea  of  the  fruits 
of  one's  labor  being  devoted  to  persons  who  put  forth  no  effort 
to  assist  the  community.  This  and  the  strong  desire  im- 
planted in  the  human  mind  for  hire  and  profit  as  the  reward 


244         THE  WALL   STREET   POINT   OF   VIEW. 

of  labor  appear  to  overcome  all  the  broader  intentions  of  ele- 
vating the  standard  of  the  whole  community  and  of  making  the 
individual  sacrifices  necessary  to  accomplish  the  end.  That 
self-preservation  which  is  the  first  law  of  nature  would  thus 
seem  of  itself  capable  of  frustrating  every  effort  to  establish  a 
community  where  the  earnings  are  to  go  into  a  common  fund, 
and  where  the  most  industrious  and  frugal  individual,  as  well  as 
the  genius,  is  to  be  depressed  to  the  working  level  of  the  lowest 
human  animal. 

The  drones  are  the  chief  disintegrators  of  all  these  social 
schemes,  but  the  tyranny  of  the  "  bosses,"  which  always 
develops  with  the  possession  of  power,  is  a  potent  factor  of 
destruction  by  inciting  rebellion.  The  worm  will  turn  when 
trampled  on. 

In  conclusion,  I  would  say  that  the  privileges  connected  with 
the  ballot-box  make  provision  for  equality  and  equity  as  near 
perfection  as  any  theory  that  the  annihilators  can  prescribe. 
With  regard  to  the  abuses  of  trusts  and  other  corporations,  the 
legislation  already  on  the  statute  books,  both  national  and  in 
most  of  the  different  States,  together  with  the  provisions  of  the 
common  law,  are  pretty  nearly  sufficient  to  deal  with  these 
matters  so  as  to  remedy  and  correct  all  abuses. 


PART  IV. 


WALL   STREET  AND  INTERNATIONAL 
AFFAIRS, 


CHAPTER   XXXII. 

PEACE  AND  PROSPERITY. 

Some  reflections  on  the  horrors  of  war.  —  How  it  ruins  material  prosperity 
and  degrades  humanity.  —  Remarks  on  the  efforts  of  the  six  European 
powers  to  put  Europe  on  a  peace  footing. — The  favorable  influence 
which  the  success  of  the  movement  would  exercise  on  trade  and  com- 
merce.—  Plans  for  an  Anglo-American  reunion  discussed. — Captain 
Mahan's  views.  —  A  defensive  alliance  of  all  civilized  nations  against  a 
possible  invasion  of  barbarians. 

I  TAKE  the  title  of  this  chapter,  "  Peace  and  Prosperity," 
to  be  the  union  of  two  words  that  in  their  meaning  can 
scarcely  be  disunited.  The  apparent  prosperity  that  war 
sometimes  brings  must  be  dearly  paid  for,  either  by  the  parties 
themselves  or  their  descendants,  as  in  the  case  of  our  own 
Civil  War,  the  debt  of  which  is  not  yet  paid. 

Napoleon  I.  brought  the  continent  at  large  to  a  condition  of 
bankruptcy  in  which  France  herself  was  overwhelmed,  despite 
the  immense  plunder  secured  by  the  unexampled  avarice  of  the 
conqueror ;  and  England,  though  she  emerged  victorious  out 
of  that  terrible  struggle,  did  so  only  at  the  expense  of  a  per- 
manent debt,  which  by  certain  statesmen  has  been  considered 
a  national  blessing,  as  a  means  of  investment.  To  me  it  seems 
rather  that  a  national  debt,  instead  of  being  a  national  blessing, 
is  a  national  curse  of  inherited  taxation  incurred  to  gratify  the 
ambition  of  a  few  individuals,  —  who  probably  never  have  to 

245 


246         THE   WALL   STREET   POINT   OF  VIEW- 

abate  one  of  their  luxuries  in  consequence  of  their  errors,  — 
or  of  being  the  instruments  of  so  much  entailed  misery  to 
millions. 

Yet  we  hear  people  constantly  talking  about  the  glorious 
achievements  of  war  and  the  prosperity  which  attends  it.  War, 
in  the  nature  of  things,  can  never  bring  prosperity  except  to  a 
comparatively  small  number  of  individuals  at  the  expense  of 
taxing  an  exceedingly  large  number,  together  with  their  off- 
spring for  generations.  These  remarks  apply  more  especially 
to  wars  of  conquest,  wars  for  sustaining  imaginary  dignity  and 
wars  for  prolonging  the  power  and  prestige  of  the  reigning 
monarch  or  executive  when  the  people  are  tired  of  him  and 
he  wants  some  excuse  or  plausible  plea  to  revive  his  popularity. 
Such  to  a  large  extent  was  the  Franco-Prussian  War  provoked 
by  the  necessity  and  ambition  of  Napoleon  III.  and  the  Em- 
press Eugenie,  and  such  would  have  been  the  war  which  might 
have  been  fomented  with  Great  Britain  by  President  Cleveland, 
when  with  overweening  zeal  he  espoused  the  cause  of  Vene- 
zuela under  the  questionable  plea  that  the  Monroe  Doctrine 
was  dangerously  menaced. 

It  has  now  been  amply  demonstrated  how  easily  that  Anglo- 
Venezuela  misunderstanding  could  have  been  settled  by  arbi- 
tration, without  causing  the  least  disturbance  to  the  business 
interests  of  either  of  the  nations  concerned ;  yet  before  this 
was  made  manifest  our  country  had  to  pass  through  an  expen- 
sive panic,  which  also  reflected  a  very  unfavorable  influence  for 
a  time  on  the  business  interests  of  Great  Britain. 

Looking  at  the  subjects  of  peace  and  war  through  the  me- 
dium of  business  experience,  to  say  nothing  of  the  far  greater 
questions  of  human  happiness  and  misery  involved  in  their 
consideration,  it  is  a  healthy  sign  of  the  times  and  a  forecast  of 
a  higher  development  in  civilization  to  witness  the  action  in 
the  interests  of  peace  and  prosperity  taken  by  the  six  great 
powers  of  Europe  in  the  Turko-Grecian  affair.  Its  success 
proves  the  possibility  of  what  has  been  regarded  as  an  impossi- 
bility, —  the  harmonious  cooperation  of  the  leading  powers  for 
the  settlement  of  critical  international  disputes,  even  concern- 


\ 

PEACE  AND  PROSPERITY.  247 

ing  matters  in  which  their  interests  conflict.  This  is  largely 
a  new  function  in  diplomacy,  and  what  was  accomplished 
in  the  case  of  this  war  shows  how  valuable  a  concert  of  this 
nature  may  become  for  the  future  maintenance  of  amicable 
international  relations.  The  concert  of  the  powers  has  intro- 
duced an  important  element  favorable  to  the  creation  of  per- 
manent political  confidence.  More  than  this,  it  is  a  great 
gain  for  quieting  the  disturbed  state  of  European  politics  that 
the  six  states  directly  interested  in  the  long  dreaded  Eastern 
question  thus  were  able  to  discuss  freely  its  involvements  and 
agree  upon  a  common  policy  to  prevent  its  being  made  an 
occasion  of  common  quarrel. 

The  business  interests  of  every  civilized  country,  and  of  some 
that  are  not  civilized  in  our  sense  of  the  term,  are  so  related  to 
one  another  through  the  expansion  and  development  of  trade 
and  commerce  that  war  has  become  a  far  more  extensively  dis- 
turbing element  than  ever  before,  and  every  year  of  progress 
renders  it  more  and  more  so.  We  have  thus  arrived  at  an  era 
in  the  advance  of  trade  when  an  outbreak  in  even  the  smallest 
of  the  nations  or  a  hostile  collision  with  its  neighbor  is  felt  as 
a  shock  charged  with  forebodings  of  evil  throughout  the  civil- 
ized world.  No  matter  how  free  we  ourselves  may  be  from  the 
immediate  interests  and  bearings  of  the  quarrel,  and  no  matter 
how  we  may  be  able  to  profit  by  it  temporarily,  owing  to  its 
stimulating  influence  in  certain  departments  of  our  exports,  we 
nevertheless  feel  it  as  a  premonitory  symptom  antagonistic  to 
the  interests  of  business  in  the  long  run. 

It  is  to  be  regretted  that  the  United  States  Senate  did  not 
entertain  a  more  cosmopolitan  opinion  of  the  great  question  of 
arbitration  between  this  country  and  Great  Britain.  In  view  of 
the  efforts  which  have  recently  been  exerted  to  put  the  nations 
on  a  peace  footing,  it  would  have  been  a  great  honor  to  this 
country  to  have  taken  the  initiative  in  such  a  grand  interna- 
tional enterprise.  The  very  effort  to  promote  such  a  laudable 
design  is  a  record  to  which  future  generations  will  point  with 
pride,  and  which  will  illumine  the  history  of  that  great  nation 
which  has  so  distinguished  itself  when  most  of  the  passing 


248         THE   WALL   STREET   POINT   OF   VIEW. 

events,  now  regarded  as  of  the  highest  importance,  shall  have 
been  quite  forgotten. 

The  idea  of  a  great  union  of  civilized  nations  for  mutual 
defense  is  rapidly  developing  in  the  minds  of  thoughtful  people. 
We  may  perhaps  say  that  its  first  impetus  was  given  at  the 
international  conference  at  The  Hague,  but  more  recent  events 
have  tended  to  the  crystallization  of  public  opinion  upon  this 
subject,  in  unmistakable  shape. 

China's  reactionary  defiance  of  the  civilized  world  has  set  the 
people  to  thinking,  and  as  a  result  we  are  about  to  witness  the 
subjugation  of  barbarianism  by  the  combined  forces  of  civiliza- 
tion. It  is  of  course  earnestly  to  be  hoped  that  this  may  be 
accomplished  with  little  bloodshed,  but  that  it  must  be  accom- 
plished, even  at  high  cost  of  life  and  treasure,  is  apparent  from 
a  glance  at  the  following  summary  of  the  population  of  the 
countries  now  interested  in  common  cause  :  — 

United  States 75,000,000 

Germany 55,000,000 

France 40,000,000 

England 40,000,000 

Japan        .         . 40,000,000 

Russia 80,000,000 


Total 330,000,000 

as  against,  say,  400,000,000  Chinese.  The  time  has  evidently 
come  for  the  step  to  be  taken.  The  Yellow  Peril  is  a  very 
real  one,  when  we  reflect  that  year  after  year  since  the  Chino- 
Japanese  War  the  armies  of  China  have  undergone  thorough 
regulation  and  drill  in  the  use  of  the  most  modern  arms  and 
appliances  of  warfare. 

Although  an  invasion  by  these  Mongolian  hordes,  similar  to 
the  descent  of  the  Goths  and  Vandals  upon  the  Roman  Empire, 
is  not  to  be  considered  probable,  still  it  must  be  granted  that 
such  a  vast  nation  under  one  strong  central  government  is  a 
menace  to  the  peace  and  prosperity  of  the  rest  of  the  world. 

To  my  mind,  the  best  solution  seems  to  lie  in  the  decentral- 
ization of  the  Chinese  government,  —  the  division  into  princi- 


PEACE   AND   PROSPERITY.  249 

palities,  autonomous  in  the  government  of  internal  affairs,  but 
under  the  tutelage  of  the  great  powers  now  having  territorial 
interests  there.  But  the  United  States  should  insist  that  perfect 
good  faith  be  kept  in  the  pledges  of  an  "open  door"  policy 
agreed  upon  by  all  the  interested  nations.  A  successful  termi- 
nation of  this  present  serious  trouble  will,  it  is  to  be  hoped, 
form  a  lasting  bond  of  friendship  between  all  the  great  powers, 
and  bring  appreciably  nearer  the  fruition  of  the  Czar's  great 
humanitarian  proposals. 

The  subject  of  an  alliance  of  the  English-speaking  people 
has  been  very  extensively  discussed  during  the  past  few  years 
by  some  of  the  ablest  writers  and  thinkers  of  the  day,  and  some 
have  gone  so  far  in  accordance  with  the  foregoing  suggestions  as 
to  advocate  an  alliance  of  all  civilized  nations.  Among  these 
may  be  mentioned  Captain  Alfred  T.  Mahan,  formerly  of  the 
United  States  Navy,  who  is,  perhaps,  one  of  the  greatest  marine 
tacticians  in  the  world,  and  a  man  capable  of  taking  the  widest 
range  of  vision  of  all  that  relates  to  the  sea,  both  from  a  mili- 
tary and  a  commercial  point  of  view.  His  ideas,  therefore,  on 
the  .possibilities  of  an  Anglo-American  reunion  are  worthy  of 
the  most  careful  consideration,  and  will  furnish  an  excellent 
guide  to  any  one  pursuing  the  study  of  the  influence  of  that 
reunion  on  the  financial  affairs  and  prosperity  of  the  proposed 
reunionists,  and  especially  on  those  of  the  United  States. 

Among  others  who  have  recently  made  most  valuable  con- 
tributions to  this  department  of  literature  may  be  mentioned 
Captain  Lord  Charles  Beresford,  of  the  Royal  Navy  of  Great 
Britain ;  also  Sir  George  Clarke,  Mr.  Arthur  Silva  White,  and 
Mr.  Andrew  Carnegie. 

Captain  Mahan  dwells  at  length  on  the  necessity  of  America 
taking  a  deeper  interest  in  the  sea,  which  he  regards  of  far 
greater  importance  than  the  land.  He  thinks  that  the  time  is 
past  forever  when  any  single  nation  can  control  the  domain  of 
the  boundless  deep,  but  suggests  that  an  Anglo-American  alli- 
ance could  do  so  to  the  great  interest  of  both  parties,  and  to 
the  union  and  the  benefit  of  humanity  at  large.  His  great 
apprehension  of  the  future  seems  to  be  a  possible  inundation 


250         THE  WALL   STREET   POINT  OF  VIEW. 

by  countless  hosts  of  outside  barbarians,  while  he  does  not 
forget  the  inside  ones  in  the  shape  of  anarchists  and  socialists. 
He  believes  in  the  firm  maintenance  of  the  military  system  for 
accomplishing  the  highest  objects  of  civilization.  In  the  pros- 
pect of  a  possible  barbarian  invasion,  Captain  Mahan  thinks 
that  the  United  States  will  be  obliged  to  play  a  prominent  part 
in  the  defense,  and,  to  quote  his  own  words,  "  to  cast  aside  the 
policy  of  isolation  which  befitted  her  infancy,  and  to  recognize 
that,  whereas  to  avoid  European  entanglement  was  once  essen- 
tial to  the  development  of  her  individuality,  now  to  take  her 
share  of  the  travail  of  Europe  is  but  to  assume  an  inevitable 
task,  an  appointed  lot  in  the  work  of  upholding  the  common 
interests  of  civilization."  He  predicts  that  against  this  possible 
invasion  the  only  barrier  will  be  the  warlike  spirit  of  the  repre- 
sentatives of  civilization,  and  adds  with  patriotic  fervor,  backed 
by  good  argument,  "  Whate'er  betide,  sea  power  will  play  in 
those  days  the  leading  part  which  it  has  in  all  history,  and  the 
United  States  by  her  geographical  position  must  be  one  of  the 
frontiers  from  which,  as  from  a  base  of  operations,  the  sea  power 
of  the  civilized  world  will  energize."  In  urging  the  just  recog- 
nition of  the  superiority  of  the  sea  to  the  land,  this  able  author 
says,  "  Control  of  the  sea  by  maritime  commerce  and  naval 
supremacy  means  predominant  influence  in  the  world,  because, 
however  great  the  wealth  of  the  land,  nothing  facilitates  the 
necessary  exchanges  as  does  the  sea." 

If  Captain  Mahan  and  other  great  thinkers  and  tacticians 
who  hold  the  same  or  similar  opinions  are  correct,  then  our 
navy  cannot  be  enlarged  too  soon  nor  too  extensively. 

It  may  be  asked,  How  will  this  accord  with  the  peace  theory 
and  the  holding  forth  of  the  olive  branch  to  the  nations?  It 
will  be  perfectly  consistent  with  that,  as  all  preparations  for 
defense,  and  defense  only,  are.  Savages  and  barbarians  bent 
on  plunder  do  not  understand  anything  about  the  significance 
of  the  olive  branch  until  they  are  first  made  to  feel  the  power 
behind  it.  Then  they  become  docile.  It  may  require  such  a 
display  of  strength  as  Captain  Mahan  supposes,  to  reduce  these 
nations  outside  of  civilization  to  a  state  of  mind  in  which  they 


PEACE   AND   PROSPERITY.  251 

will  feel  disposed  to  reason,  so  far  as  they  are  capable  of  rea- 
soning. But  in  order  to  accomplish  this  great  purpose,  the 
necessity  for  which  may  still  be  far  distant,  a  pacific  alliance 
among  all  civilized  nations,  irrespective  of  language,  will  be  an 
indispensable  preliminary.  Such  preparation  would  certainly 
be  the  best  guaranty  for  universal  peace  and  prosperity,  thus 
enabling  the  human  race  to  apply  its  best  energies  to  its  own 
development  instead  of  to  its  degradation  and  destruction. 


CHAPTER   XXXIII. 

THE  BARING   FAILURE. 

The  true  story  of  the  cause  of  that  astounding  collapse  told  for  the  first 
time.  —  The  great  Baring  boom,  and  what  the  scaling  down  of  the 
interest  on  British  consols  had  to  do  with  it. — The  Duke  of  Marlbor- 
ough's  hand  in  it.  —  Sensational  acts  of  the  hypnotic  gentleman  who 
captivated  the  Argentine  beauty,  and  through  her  captured  all  the 
Barings'  business  in  the  South  American  republic.  —  Magnificent  execu- 
tive ability  displayed  by  Mr.  Lidderdale  in  the  rehabilitation  of  the 
firm.  —  Amazing  gratitude  of  the  benevolent  friend  who  assisted  Lord 
Revelstoke  with  five  million  dollars. — The  future  money  center  of  the 
world. 

THERE  have  been  many  versions  of  the  Baring  failure 
and  its  causes,  but  the  true  story  of  the  latter  is  here  told 
for  the  first  time. 

The  means  to  obtain  the  money  which  caused  the  big  Baring 
boom,  first  in  the  securities  of  Guinness's  XX.  and  afterward  in 
the  properties,  real  and  imaginary,  of  Argentina,  originated  in 
the  act  of  Parliament,  a  few  years  ago,  which  scaled  down  the 
interest  on  the  British  consols  from  3  to  2|  per  cent.,  and  that 
act  of  Parliament  originated  in  a  casual  conversation  between 
the  Duke  of  Marlborough  and  myself. 

When  the  Duke,  who  married  Mrs.  Lily  Price  Hamersley, 
now  Lady  Charles  Beresford,  was  in  New  York,  he  and  I  be- 
came quite  well  acquainted,  and  had  frequent  conversations  on 
financial  questions  and  other  subjects,  in  all  of  which  I  found 
him  an  exceedingly  brilliant  talker,  thoroughly  informed  on  all 
subjects  that  came  up. 

One  evening  the  conversation  was  diverted  to  a  comparison 
of  the  market  value  of  our  government  bonds  with  that  of  the 
British  3  per  cents.,  or  "  consols  "  as  they  are  called.  These 
securities  had  been  called  "consols"  by  way  of  abbreviation 

252 


THE   BARING   FAILURE.  253 

since  the  time  of  the  Consolidated  Act  in  1757,  in  the  reign  of 
George  II.,  by  which  the  debts  of  the  nation,  including  annui- 
ties, were  consolidated  or  brought  together  into  one  scheme, 
an  average  rate  of  interest  being  struck  at  3  per  cent.  This 
rate  had  never  been  changed,  and  it  was  therefore  natural  for 
the  idea  to  get  into  the  British  mind  that  it  was  destined  to 
be  perpetual. 

As  these  "consols,"  or  the  British  consolidated  fund,  are  kept 
in  account  in  the  Bank  of  England  and  virtually  form  the  great 
bulwark  of  its  deposits,  the  decrease  in  the  rate  of  interest  was 
regarded  as  an  injury  to  the  credit  of  that  mighty  financial  in- 
stitution, which  had  been  established  in  1694  on  the  first 
national  loan  of  ^1,200,000,  to  William  III. 

I  said,  "  Your  Grace,  the  English  consols  in  comparison  with 
our  government's  ought  to  be  reduced  to  a  lower  rate  of  inter- 
est, as  3  per  cent,  for  such  a  high  grade  security  is  too  high,  and 
the  premium  at  which  our  bonds  are  now  selling  makes  the 
credit  of  the  United  States  higher  than  that  of  Great  Britain," 
—  for  our  bonds  were  then  on  the  basis  of  2\  per  cent,  per 
annum  or  thereabout. 

Marlborough  appreciated  the  criticism  at  once,  and  remarked 
that  his  government  ought  to  stand  on  an  equal  footing  with 
that  of  the  United  States.  He  added,  "  The  comparison  from 
your  point  of  view,  with  which  I  coincide,  has  never,  I  think, 
been  presented  to  the  British  Parliament ;  but  I  will  call  the 
attention  of  some  of  my  political  friends  to  the  subject  as  soon 
as  I  return  home." 

The  Duke  remembered  this  resolve ;  the  attention  of  Parlia- 
ment was  called  to  the  subject,  and  the  result  was  that  the  in- 
terest on  consols  was  cut  down  to  z\  per  cent,  by  an  act  of 
Parliament,  with  the  understanding  that  there  should  be  a 
further  reduction  to  2^  per  cent. 

When  the  fact  was  announced  that  the  rate  of  these  time- 
honored  and  most  reliable  securities  had  been  reduced  one 
quarter  of  i  per  cent.,  the  surprise  and  astonishment  of  their 
holders  in  England  could  hardly  have  been  greater  if  they 
had  been  struck  by  a  cyclone  ;  and  if  some  of  them  had  known 


254         THE   WALL   STREET  POINT   OF  VIEW. 

that  the  Duke  was  at  the  bottom  of  it,  Blenheim  Castle  might 
not  have  been  the  best  place  for  him  to  seek  repose  and 
shelter. 

To  the  American  mind  one  quarter  decline  in  the  interest  of 
any  security  appears  of  but  small  account ;  but  if  we  take  into 
consideration  the  result  to  the  steady-going  life  of  the  average 
Englishman,  with  his  income  adjusted  to  a  certain  mode  of  liv- 
ing just  so  as  to  make  both  ends  meet,  we  can  easily  imagine 
that  this  decline  of  one  twelfth  was  sufficient  to  produce  a 
shock.  If  it  deprived  him  of  only  one  or  two  luxuries,  it  was 
yet  a  hard  matter ;  but  this  cutting  off  of  one  twelfth  of  their 
income  was  to  plunge  many  of  them  irretrievably  into  debt. 
Consequently  they  became  desperate,  and  in  the  moment  of 
their  partial  frenzy  they  determined  to  part  with  their  holdings 
and  buy  into  others  that  would  yield  more. 

This  was  the  opportune  moment  when  the  Barings  resolved 
to  put  upon  the  market  the  Guinness's  Stout  Corporation  secu- 
rities. Guinness's  XX.  was  a  commodity  known  and  appreci- 
ated by  everybody  in  Great  Britain  and  her  colonies  who  had 
arrived  at  the  years  of  discretion,  and  the  shares  were  known 
to  have  for  their  basis  one  of  the  best  properties  in  all  the  Brit- 
ish dominions.  Consols  were,  therefore,  rapidly  changed  into 
cash,  and  invested  in  this  new  and  promising  security.  The 
Barings  took  in  the  money  with  such  rapidity,  and  the  accu- 
mulations became  so  large,  that  the  fiction  of  Sindbad  the  Sailor 
in  the  Valley  of  Diamonds  might  have  seemed  more  true  than 
the  reality. 

While  the  tide  of  this  wonderful  prosperity  was  still  rising 
and  threatening  to  overwhelm  all  other  multi-millionaires,  a 
young  man  with  a  strong  resemblance  to  Adonis  in  features, 
and  an  Apollo  Belvedere  in  form,  was  roaming  through  South 
America  eking  out  a  precarious  existence  by  selling,  for  a 
noted  New  York  chemical  firm,  a  new  pill  warranted  to  cure 
fever  and  ague  and  several  other  malarial  ills  to  which  flesh  is 
heir  in  sultry  climes.  He  was  also  equipped  by  the  same  firm 
with  samples  of  the  famous  Florida  water,  which  was  presumed 
to  exercise  about  the  same  healing  influence  externally  that  the 


THE   BARING   FAILURE.  255 

pill  possessed  internally.  He  was  by  birth  a  natural  hypnotist, 
improved  by  art,  and  had  been  a  pupil  of  the  famous  Charcot, 
the  French  hypnotist,  but  was  not  particular  about  his  master's 
advice  never  to  take  advantage  of  his  power  for  selfish  purposes. 
This  young  man  had  been  employed  by  the  firm,  and  was 
intrusted  with  the  South  American  mission  on  account  of  his 
linguistic  abilities  and  his  amazing  hypnotic  power  in  convinc- 
ing the  people  of  every  tongue  and  clime  that  the  pill  and  the 
water  were  exactly  what  he  represented  them  to  be,  only  a 
little  superior  in  quality,  perhaps,  modesty  being  one  of  his 
many  personal  characteristics. 

The  wanderings  of  this  disciple  of  ^Esculapius  over  the  pam- 
pas of  South  America  would  afford  material  for  a  new  Odyssey, 
but  I  will  omit  most  of  his  adventures,  and  confine  myself  as 
closely  as  possible  to  those  more  immediately  connected  with 
the  Baring  failure.  He  did  not  meet  with  any  particular  siren 
or  other  enchantress,  to  my  knowledge,  until  he  arrived  at 
Buenos  Ayres,  where  he  encountered  one  of  nature's  loveliest 
daughters,  a  Venus  of  the  pampas.  The  hypnotist  was  bent  on 
combining  business  with  pleasure,  and  lost  no  time  in  securing 
his  newly  found  prize  against  the  possibility  of  recapture  by 
leading  her  to  Hymen's  altar.  He  went  through  the  formality 
of  politely  asking  the  consent  of  her  father,  who  was  the  head 
of  the  firm  of  Barings'  agency  in  Argentina,  and  who  at  first 
objected  to  the  marriage  on  such  short  acquaintance ;  but  he 
soon  surrendered  to  the  irresistible  influence  of  the  hero's  mag- 
netism, and  his  new  son-in-law  became  a  member  of  the  firm. 

This  modern  Ulysses,  taking  Shakespeare's  advice,  threw  his 
pill  and  Florida  water  to  the  dogs,  and  went  into  another  line 
of  business.  Like  a  dutiful  son-in-law,  he  exhibited  gratitude 
toward  his  bride's  parent  by  taking  the  burden  of  managing 
the  firm  off  his  hands,  and  through  the  same  hypnotic  propen- 
sity became  manager  of  the  concern,  showing  that,  like  Ulysses 
again,  he  was  "  a  man  of  many  resources."  He  visited  London 
just  at  the  time  the  Barings  were  looking  out  for  new  financial 
worlds  to  conquer,  saw  Lord  Revelstoke,  who  was  then  at  the 
head  of  the  house,  as  well  as  one  of  the  directors  in  the  Bank 


2$6         THE  WALL   STREET   POINT   OF  VIEW. 

of  England,  and  pictured  to  his  lordship  the  new  imaginary 
worlds  in  the  Republic  of  Argentina. 

Revelstoke  had  some  doubts  at  first  as  to  the  magnitude  of 
Argentina's  wealth,  and  in  order  to  remove  these,  he  sent  an 
agent  to  Argentina  with  our  hypnotic  hero  who,  like  Elijah 
with  Elisha,  threw  a  double  portion  of  his  persuasive  spirit 
upon  the  agent,  sending  him  back  to  Revelstoke  with  a  story 
of  prospective  wealth,  compared  with  which  the  exaggerated 
accounts  first  given  seemed  mild  and  unassuming.  Revelstoke 
no  longer  hesitated,  but  began  to  organize  these  newly  dis- 
covered properties,  adding  the  new  securities  to  those  of 
Guinness's  XX. 

But  Englishmen  are  proverbially  conservative.  As  soon  as 
purchasers  became  aware  of  the  fact  that  the  properties  behind 
the  fresh  securities  were  not  virtually  gold  mines  and  valuable 
concessions  in  Argentina,  but  rather  castles  in  Spain,  they  be- 
gan to  realize  quickly  on  all  Barings'  securities.  The  result 
can  be  easily  imagined.  The  Baring  riches  began  to  take 
wings.  The  Barings  tried  hard  to  impede  their  flight,  and 
might  have  done  so  with  the  $100,000,000  of  Russian  gold 
which  was  still  in  their  vaults ;  but  the  astute  Rothschilds,  it 
is  alleged,  or  somebody  in  their  interest,  informed  the  Czar  of 
the  firm's  unfortunate  situation,  and  his  Imperial  Highness  of 
Russia  ordered  that  gold  transferred  from  London  to  the  vaults 
of  the  Rothschilds  at  Frankfort-on-the-Main,  and  elsewhere. 

Down  went  the  great  house  of  Baring,  as  if  struck  by  lightning. 

Now  comes  the  second  part  of  this  chapter  which  describes 
one  of  the  greatest  feats  in  all  the  history  of  financiering.  It 
was  performed  by  Mr.  Lidderdale,  Chairman  of  the  Board  of 
Governors  of  the  Bank  of  England,  who  had  been  for  a  con- 
siderable time  a  resident  of  New  York,  representing  the  great 
mercantile  firm  of  Rathbone  and  Company  of  London.  By  his 
able  work  at  this  crisis  he  averted  a  panic  which,  but  for  his 
timely  intervention,  would  in  all  probability  have  been  world- 
wide. 

At  that  time  merchant  ships  on  every  sea  with  their  precious 
cargoes  were  relying  on  the  Barings  to  credit  their  bills  of 


THE   BARING   FAILURE.  257 

lading.  Merchants  and  business  men  everywhere  were  depend- 
ing on  the  house  for  credit  to  tide  them  over.  Then  there 
were  thousands  upon  thousands  who  had  Barings'  paper,  which 
had  hitherto  been  considered  as  good  as  gold  everywhere. 

When  we  take  a  retrospect  of  these  things,  we  can  imagine 
the  Herculean  task  Mr.  Lidderdale  had  undertaken ;  viz.,  to 
stand  in  the  place  of  the  broken-down  Barings,  to  act  as  sub- 
stitute for  them,  to  answer  all  immediate  claims,  and  to  pay 
all  immediate  demands  until  the  clouds  should  roll  by  and 
the  Barings  again  be  put  upon  their  feet.  It  took  seven  mil- 
lion pounds  sterling,  equal  to  $35,000,000,  to  essay  the  mighty 
task,  and  this  he  procured  from  the  Bank  of  England  through 
his  great  influence  with  the  governors  of  that  institution.  In 
fact,  the  majority  of  the  banks  and  bankers  in  London  also  lent 
their  aid  in  the  work  of  rehabilitation. 

Perhaps  there  was  no  man  in  England  qualified  to  attempt 
the  gigantic  operation  except  Mr.  Lidderdale.  Where  did  he 
learn  how  to  do  it  ?  It  had  never  been  done  in  England  be- 
fore. There  was  no  attempt  in  the  case  of  Overend,  Gurney  and 
Company,  in  1866,  to  ward  off  the  blow  by  such  means.  Mr. 
Lidderdale  must  have  learned  his  modus  operandi  from  his  ex- 
perience in  the  methods  of  the  New  York  Clearing  House, 
particularly  its  mode  of  warding  off  panics  by  the  issue  of  cer- 
tificates. This  famous  transaction  on  his  part,  therefore,  re- 
flects the  highest  credit  upon  New  York  banking  management, 
and  acknowledges  the  managers  of  our  united  city  banks  to  be 
in  the  foremost  rank  of  the  world's  financiers. 

There  are  certain  circumstances  connected  with  the  reorgani- 
zation of  the  house  of  Barings  heretofore  known  to  but  few, 
which  are  of  the  most  interesting  character.  How  the  firm 
got  so  suddenly  on  its  feet  again  has  puzzled  many  financiers, 
who  thought  they  were  very  clear-sighted  in  such  matters  and 
could  see  through  almost  anything  in  the  financial  world,  no 
matter  how  dense  it  might  appear  to  others. 

It  was  not  the  Bank  of  England  that  did  it,  though  most 
people  think  it  was.  That  institution  carried  over  only  the 
outstanding  obligations,  though  this  operation  undoubtedly  was 


258          THE   WALL   STREET   POINT   OF   VIEW. 

a  great  deal  for  the  bank  to  do,  and,  as  previously  stated,  it 
averted  a  panic  the  extent  of  which,  from  the  nature  of  things, 
must  have  been  world-wide.  But  setting  the  Barings  on  their 
feet  again,  and  making  them  once  more  conspicuous  in  the 
eyes  of  the  world  and  as  fully  trusted  as  before,  was  wholly 
another  matter,  and  cannot  be  confounded  with  the  operation 
so  ably  managed  by  Mr.  Lidderdale. 

Some  people  may  infer  that  it  must  have  taken  a  powerful 
syndicate  to  perform  this  work.  I  admit  that  such  an  inference 
would  be  quite  natural,  for  the  task  was  a  huge  one ;  and  if  the 
event  had  occurred  in  New  York,  the  chances  are  that  only  a 
syndicate  with  millions  at  its  back  would  have  essayed  the 
undertaking.  It  may  therefore  seem  to  the  reader  that  I  am 
taxing  his  credulity  too  severely  when  I  ask  him  to  believe  that 
the  reorganization  of  the  Baring  Brothers  into  a  limited  liability 
company  was  accomplished  by  one  man.  He  came  forth  from 
a  well-earned  retirement  and  placed  his  whole  fortune,  a  million 
pounds  sterling,  #5,000,000,  at  the  disposal  of  the  Baring 
Brothers.  He  was  simply  a  relative  of  the  family,  but  alas ! 
how  few  are  the  relatives  so  unselfish  as  he  proved  himself  to 
be.  In  fact,  many  relatives  would,  in  the  circumstances, 
have  brought  railing  accusations  against  the  unfortunate  ones 
and  played  Job's  comforters.  This  man  was  not  of  that  stamp. 
He  was  one  of  nature's  noblemen.  What  a  lesson  such  a  man 
teaches  to  those  cold-hearted,  grasping  misers,  who  hold  fast 
to  their  wealth  even  on  the  brink  of  the  grave.  He  had  made 
a  fortune  in  the  old  house  of  the  Barings  and  had  retired  to 
enjoy  it  in  the  evening  of  life.  He  was  a  bachelor,  well 
known  in  financial  circles  in  New  York,  and  had  lived  here 
several  years,  being  a  member  of  the  banking  firm  of  Ward, 
Campbell  and  Company,  52  Wall  Street. 

These  are  the  bare  facts,  the  mere  outlines  of  a  financial 
episode  of  real  life  in  our  own  times,  and  I  believe  it  is  hardly 
an  exaggeration  to  say  that  they  would  afford  material  to  an 
imaginative  author,  which  I  make  no  pretense  of  being,  for  the 
production  of  a  most  thrilling  fiction. 

The  great  firm  of  Barings  was  the  result  of  the  growth  of  a 


THE   BARING   FAILURE.  259 

hundred  years,  during  which  its  ramifications  extended  all  over 
the  world,  but  the  blooming  of  this  great  century  plant  of  com- 
merce in  South  American  fields  overtaxed  the  strength  of  the 
parent  stock,  so  that  it  must  needs  have  a  period  of  recupera- 
tion. 

The  position  occupied  by  this  great  house  was  unique  in  the 
history  of  the  world.  Decade  after  decade  had  fostered  the 
establishment  of  the  greatest  credit  ever  accorded  a  private 
firm.  Its  activities  were  world-wide.  Through  this  ever  in- 
creasing confidence  its  bills  were  accepted  without  question 
and  without  limit,  as  equivalent  to  cash  the  world  over. 

The  merchant  at  Hong  Kong,  at  Yokohama,  at  Melbourne, 
at  Cape  Town,  or  at  Rio  de  Janeiro,  who  in  return  for  his  ship- 
ments received  their  documents,  no  matter  whether  these  were 
dated  at  two  months,  three  months,  or  six  months,  had  the 
immediate  equivalent  of  cash.  Such  a  credit  virtually  provided 
an  addition  of  many  hundreds  of  millions  to  the  world's  cur- 
rency. 

It  may  be  considered  doubtful  if  such  a  position  will  ever 
again  be  held  by  any  single  private  concern ;  at  least,  it  is  not 
likely  in  our  time.  Still,  it  is  a  source  of  very  great  satisfaction 
that  the  old  house  has,  since  its  rehabilitation,  again  advanced 
in  popular  confidence. 

"  You  may  break,  you  may  shatter  the  vase  if  you  will, 
But  the  scent  of  the  roses  will  hang  round  it  still," 

is  peculiarly  applicable.  The  fragrant  odor  of  a  great  and 
honorable  name  has  not  suffered  destruction,  while  the  vessel 
has  been  cemented  together.  An  effect  of  the  tremendous 
shock  which  their  misfortunes  caused  may  be  observed  in  the 
course  of  the  London  money  market  since  1890.  Prior  to  that 
time,  for  years  the  maximum  interest  rate  scarcely  ever  ex- 
ceeded 3  per  cent.,  ruling  almost  invariably  at  a  much  lower 
rate.  Since  then,  however,  London  discount  rates  have  been 
subject  to  the  wider  fluctuations  of  other  money  centers. 
Does  not  this  unsettling  of  stability  presage  a  shifting  elsewhere 
of  the  great  money  center  of  the  world  ? 


260         THE  WALL   STREET   POINT   OF   VIEW. 

And  if  so,  why  not  to  New  York?  We  have  here  the  metrop- 
olis of  what  is  acknowledged  the  richest  country  in  the  world  — 
a  city  rapidly  becoming  as  cosmopolitan  as  London,  financial 
institutions  and  great  business  firms  which  rival  those  of  the 
Old  World,  and  in  addition  a  geographical  position  at  the  very 
gateway  of  this  continent  which  places  it,  in  that  respect,  beyond 
rivalry.  All  these  factors  tend  toward  the  establishment  here 
of  that  necessary  foundation  of  stability  which  fosters  commer- 
cial and  financial  supremacy. 


CHAPTER   XXXIV. 

THE   VENEZUELA  MESSAGE  PANIC. 

This  panic  one  of  the  most  far-reaching  and  most  disastrous  in  its  conse- 
quences. —  It  was  a  surprise,  and  hence  its  great  power  for  mischief, 
especially  at  a  time  when  prosperity  was  just  under  way.  —  An  utter 
collapse  of  credit,  both  foreign  and  domestic,  aggravated  by  foreign 
holders  returning  our  securities.  — The  Monroe  Doctrine  and  how  Presi- 
dent Cleveland  construed  it.  —  Simply  an  outburst  of  honest  and  over 
weening  patriotism  on  his  part.  —  His  misapprehensions  regarding  the 
nature  of  so-called  international  law,  and  what  constitutes  a  casus  belli. 
—  The  President's  just  cause  for  offense  at  Salisbury's  hauteur,  but  sfill 
the  Monroe  Doctrine  not  applicable  to  the  case.  —  How  the  message 
and  its  consequences  played  into  the  hands  of  the  free-silver  faction  and 
helped  to  make  the  candidacy  of  Bryan  possible. 

THE  Venezuela  message  panic  was  probably  farther  reach- 
ing and  really  more  disastrous  than  any  in  recent  times, 
primarily  for  the  reason  that  it  was  sudden  and  unexpected. 

The  rumblings  of  the  silver  panic  were  distinctly  heard  in 
the  distance  ;  so  with  the  tariff  panic,  and  also  in  the  case  of 
the  currency-reform  panic.  Disaster  growing  out  of  the  last- 
named  was  due  to  the  apprehension  that  State  banks  were 
going  to  supplement  the  national  banks  with  all  the  horrors  of 
wild- cat  currency  associated  with  the  name  of  those  institutions 
in  former  years,  the  great  variety  and  large  volume  of  whose 
notes,  together  with  their  numerous  and  bewildering  counter- 
feits, had  complicated  finances  prior  to  the  Civil  War. 

But  let  us  examine  the  circumstances  associated  with  the 
Venezuela  message  panic  more  closely.  They  are  of  the  deep- 
est interest  to  the  people  of  this  country,  and  show  us  the  stern 
necessity  of  an  Executive  acting  with  the  most  diplomatic  dis- 
cretion where  international  affairs  are  involved,  and  where  a  rash 
or  false  move  may  in  an  instant  let  loose  the  dogs  of  war  and 

261 


262         THE   WALL   STREET   POINT   OF  VIEW. 

ruin  business.  It  is  like  playing  with  fire,  when  the  head  of  a 
nation  touches  rudely  a  point  which  may  be  made  a  casus  belli 
by  some  sensitive  people.  Happily,  Great  Britain  was  not  very 
sensitive  on  the  matter  in  question. 

The  candid  intention  of  Mr.  Cleveland  was  a  patriotic  defense 
of  the  Monroe  Doctrine,  but  the  time  and  the  occasion  were 
inappropriate.  For  several  months  prior  to  the  date  of  this 
diplomatic  document  business  had  been  reviving,  and  confi- 
dence was  being  gradually  restored.  A  fresh  impetus  was 
visible  in  the  channels  of  trade  all  over  the  country,  and  a  gen- 
eral feeling  of  cheerfulness,  which  had  not  been  discernible 
since  1893,  pervaded  the  masses.  Stocks  had  gone  up  very 
considerably,  dry  goods  were  selling  at  a  more  lively  rate,  with 
advancing  prices  from  the  jobbers  to  the  retail  merchants,  and 
quite  a  prosperous  business  all  around  had  been  successfully 
initiated. 

At  this  juncture  news  came  from  Washington,  and  was  duly 
distributed  by  the  news  agencies,  to  the  effect  that  Mr.  Cleve- 
land had  gone  off  on  another  duck-hunting  tour.  This,  too, 
was  a  reassuring  feature  of  the  times,  bearing  upon  the  subject 
of  prosperity.  It  was  naturally  inferred  that  if  the  President 
felt  at  liberty  to  go  off  on  a  tour  of  recreation,  his  mind  must  be 
in  a  state  of  agreeable  composure  so  far  as  public  affairs  were 
concerned,  and  that  he,  too,  was  enjoying  a  full  share  of  the 
beneficent  influence  of  the  improved  condition  of  business. 

After  a  few  days'  absence  from  Washington,  the  nation  was 
informed,  to  its  great  satisfaction,  that  the  President  was  having 
unprecedented  success  in  his  sport  and  that  he  seldom  missed 
his  aim.  Then,  in  an  evil  hour,  he  returned  to  Washington 
and  sprung  that  ill-starred  Venezuela  message  on  Congress  and 
the  civilized  world. 

It  was  December  1 7, 1895,  when  the  blow  fell.  The  effect  was 
instantaneous,  and  the  panic  spread  like  wildfire  all  over  the 
Union,  and  wherever  our  credit  relations  in  Europe  existed  the 
same  feeling  of  distrust  and  dread  of  coming  calamity  seized 
the  minds  of  the  people  at  large.  There  was  a  wild  rush  to  sell 
everything  on  the  very  shortest  notice,  and  to  get  gold  if  pos- 


THE   VENEZUELA   MESSAGE   PANIC.  263 

sible,  for  the  dreadful  specter  of  war  admonished  the  people 
that  the  yellow  metal  would  be  their  tower  of  strength  in  the 
event  of  hostilities.  Credit  was  broken  down  to  an  extent  that 
the  country  had  not  witnessed  since  1873,  and  there  was  scarcely 
a  household  throughout  the  length  and  breadth  of  the  land 
where  the  baneful  effects  of  this  war  scare  were  not  felt.  In 
fact,  the  whole  country  lay  prostrate  in  presence  of  the  phantom 
of "  blood  and  iron  "  which  the  people  had  conjured  up  from 
the  depths  of  their  own  fertile  imaginations,  because  there 
was  nothing  in  reality  to  justify  half  the  excitement  which  the 
occasion  developed.  With  the  exception  of  the  last  two  para- 
graphs or  so,  the  language  of  the  message  was  almost  as  mild 
and  inoffensive  as  the  one  delivered  to  Congress  by  President 
Monroe  on  December  2,  1823  ;  and  that  message  was  a  model 
of  smoothness  and  politeness,  the  Monroe  Doctrine  itself,  so 
called,  being  couched  in  such  harmonious  and  conciliatory 
language  as  not  to  offend  the  most  fastidious  taste. 

The  whole  pith  of  the  Monroe  Doctrine  is  contained  in  the 
following  clear  and  admirably  constructed  sentence,  — 

"  With  the  existing  colonies  or  dependencies  of  any  of  the  Euro- 
pean powers  we  have  not  interfered  and  shall  not  interfere  ;  but  with 
the  governments  who  have  declared  their  independence  and  main- 
tained it,  and  whose  independence  we  have  on  great  consideration 
and  on  just  principles  acknowledged,  we  could  not  view  any  inter- 
position for  the  purpose  of  oppressing  them,  or  controlling  in  any 
other  manner  their  destiny,  by  any  European  power,  in  any  other 
light  than  as  a  manifestation  of  an  unfriendly  disposition  toward  the 
United  States." 

This  is  a  very  long  sentence,  but  at  the  same  time  the  lan- 
guage is  clear  and  comprehensive.  It  is  smooth,  non-com- 
mittal, and  diplomatic  in  every  happily  chosen  word.  There 
is  a  peaceful  tone  even  in  its  rhythm,  and  yet  when  you  read 
between  the  lines  you  find  that  beneath  the  conciliatory  and 
peace-loving  surface  there  is  something  in  it  which  says,  "  If 
you  don't  heed  this  admonition,  but  intend  to  bring  on  the 
armies  of  your  Holy  Alliance  to  recapture  Brazil  for  a  worthless 


264         THE   WALL   STREET   POINT   OF   VIEW. 

king  who  will  cover  the  Atlantic  with  fleets  of  pirates  and  com- 
mit wholesale  murder  and  robbery,  the  United  States  will  fight." 
Viewed  in  this  light,  the  Monroe  message  was  virtually  more 
belligerent  than  the  Cleveland  message.  Yet  the  words  of  the 
sentence  are  so  well  put  together  that  it  is  difficult  to  construe 
it  so. 

In  reading  Mr.  Cleveland's  message  carefully  in  its  entirety, 
one  can  see  where  it  was  quite  natural  and  easy  for  him  to  fall 
into  the  error  which  provoked  the  threat  in  the  last  three  para- 
graphs, and  especially  in  the  final  one.  Mr.  Cleveland  inferred 
that  the  very  act  against  which  President  Monroe  mildly  admon- 
ished the  European  powers  had  been  actually  committed  in 
the  Venezuela  affair.  He  labored  under  the  impression  that 
the  English  claim  as  to  the  boundary  line  was  simply  a  pretext 
for  extending  the  English  system  to  this  hemisphere  in  violation 
of  the  Monroe  Doctrine.  The  following  short  paragraph  explains 
the  logic  on  which  Mr.  Cleveland  leaned  for  the  justification 
of  this  opinion  :  — 

"  If  a  European  power,  by  an  extension  of  its  boundaries,  takes 
possession  of  the  territory  of  one  of  our  neighboring  republics 
against  its  will  and  in  derogation  of  its  rights,  it  is  difficult  to  see 
why,  to  that  extent,  such  European  power  does  not  thereby  attempt  to 
extend  its  system  of  government  to  that  portion  of  this  continent 
which  is  thus  taken.  This  is  the  precise  action  which  President 
Monroe  declared  to  be  '  dangerous  to  our  peace  and  safety,'  and  it 
can  make  no  difference  whether  the  European  system  is  extended 
by  an  advance  of  frontier  or  otherwise." 

This  reasoning  appears  very  plausible  from  Mr.  Cleveland's 
standpoint,  but  it  is  not  conclusive  nor  broad  enough  in  its 
scope  to  take  in  the  whole  situation.  It  seems  to  overlook 
the  fact  that  the  land  in  dispute  had  belonged  to  Great 
Britain  by  prescriptive  right  and  adverse  possession  for 
sixty  years,  whereas  twenty  years  would  have  been  sufficient, 
according  to  the  laws  of  most  countries,  to  establish  permanent 
ownership.  Having  got  this  idea  fully  impressed  upon  his 
mind,  and  reasoning  on  these  premises,  it  is  easy  to  see  how  he 


THE   VENEZUELA   MESSAGE   PANIC.  265 

arrived  at  the  panic-breeding  and  hostile  conclusion  which  he 
honestly  thought  was  indispensable  to  maintain  the  honor  and 
integrity  of  the  nation  whose  "  peace  and  safety,"  as  the  Mon- 
roe Doctrine  expresses  it,  he  considered  endangered.  When 
in  connection  with  this  interpretation  we  consider  the  some- 
what supercilious  and  haughty  refusal  of  Lord  Salisbury  to 
submit  the  matter  to  arbitration,  it  is  not  so  difficult  to  discern 
the  exasperating  causes  that  moved  him  to  treat  Salisbury  as 
cavalierly  as  his  lordship  had  treated  our  President  and  Mr. 
Olney,  the  Secretary  of  State. 

These  are  certainly  extenuating  circumstances,  panic  or  no 
panic,  for  that  imprudent  part  of  the  message  which  caused  the 
financial  upheaval.  The  following  and  concluding  parts  of  the 
message  are  self-explanatory  on  these  points  :  — 

"  The  course  to  be  pursued  by  this  government,  in  view  of  the 
present  condition,  does  not  appear  to  admit  of  serious  doubt. 
Having  labored  faithfully  for  many  years  to  induce  Great  Britain  to 
submit  this  dispute  to  impartial  arbitration,  and  having  been  now 
finally  apprised  of  her  refusal  to  do  so,  nothing  remains  but  to  accept 
the  situation,  to  recognize  its  plain  requirements,  and  deal  with  it 
accordingly.  Great  Britain's  present  proposition  has  never  thus 
far  been  regarded  as  admissible  by  Venezuela,  though  any  adjust- 
ment of  the  boundary  which  that  country  may  deem  for  her  advan- 
tage, and  may  enter  into  of  her  own  free  will,  cannot,  of  course,  be 
objected  to  by  the  United  States. 

"  Assuming,  however,  that  the  attitude  of  Venezuela  will  remain 
unchanged,  the  dispute  has  reached  such  a  stage  as  to  make  it  now 
incumbent  upon  the  United  States  to  take  measures  to  determine 
with  sufficient  certainty  for  its  justification  what  is  the  true  divisional 
line  between  the  Republic  of  Venezuela  and  British  Guiana.  The 
inquiry  to  that  end  should  of  course  be  conducted  carefully  and 
judicially,  and  due  weight  should  be  given  to  all  available  evidence, 
records,  and  facts  in  support  of  the  claims  of  both  parties. 

u  In  order  that  such  an  examination  should  be  prosecuted  in  a 
thorough  and  satisfactory  manner,  I  suggest  that  the  Congress  make 
an  adequate  appropriation  for  the  expenses  of  a  commission  to  be 
appointed  by  the  Executive,  who  shall  make  the  necessary  investiga- 
tion and  report  upon  the  matter  with  the  least  possible  delay. 
When  such  report  is  made  and  accepted  it  will,  in  my  opinion,  be 


266         THE  WALL   STREET   POINT  OF  VIEW. 

the  duty  of  the  United  States  to  resist,  by  every  means  in  its  power, 
as  a  wilful  aggression  upon  its  rights  and  interests,  the  appropriation 
by  Great  Britian  of  any  lands  or  the  exercise  of  governmental  juris- 
diction over  any  territory  which,  after  investigation,  we  have  deter- 
mined of  right  belongs  to  Venezuela. 

"  In  making  these  recommendations  I  am  fully  alive  to  the 
responsibility  incurred,  and  keenly  realize  all  the  consequences  that 
may  follow. 

"I  am,  nevertheless,  firm  in  my  conviction  that  while  it  is  a 
grievous  thing  to  contemplate  the  two  great  English-speaking  peoples 
of  the  world  as  being  otherwise  than  friendly  competitors  in  the 
onward  march  of  civilization,  and  strenuous  and  worthy  rivals  in  all  the 
arts  of  peace,  there  is  no  calamity  which  a  great  nation  can  invite 
which  equals  that  which  follows  a  supine  submission  to  wrong  and 
injustice  and  the  consequent  loss  of  national  self-respect  and  honor, 
beneath  which  are  shielded  and  defended  a  people's  safety  and 
greatness." 

Another  error  into  which  Mr.  Cleveland  incidentally  fell,  and 
which  stimulated  him  to  arrive  at  the  conclusion  that  a  casus 
belli  had  been  committed  by  Great  Britain,  is  contained  in  the 
following  excerpts  from  the  message  :  — 

"  Practically,  the  principle  for  which  we  contend  has  peculiar,  if 
not  exclusive,  relation  to  the  United  States.  It  may  not  have  been 
admitted  in  so  many  words  in  the  code  of  international  law,  but, 
since  in  international  councils  every  nation  is  entitled  to  the  rights 
belonging  to  it,  if  the  enforcement  of  the  Monroe  Doctrine  is  some- 
thing we  may  justly  claim,  it  has  its  place  in  the  code  of  interna- 
tional law  as  certainly  and  as  securely  as  if  it  were  specifically 
mentioned ;  and  when  the  United  States  is  a  suitor  before  the  high 
tribunal  that  administers  international  law,  the  question  to  be 
determined  is  whether  or  not  we  present  claims  which  the  justice  of 
that  code  of  law  can  find  to  be  right  and  valid. 

"The  Monroe  Doctrine  finds  its  recognition  in  those  principles  of 
international  law  which  are  based  upon  the  theory  that  every  nation 
shall  have  its  rights  protected  and  its  just  claims  enforced." 

Unfortunately  for  these  opinions  there  is  no  code  of  inter- 
national law  except  by  a  figure  of  speech  highly  inflated. 
In  a  well-regulated  world  there  ought  to  be  such  a  code,  and 


THE   VENEZUELA   MESSAGE   PANIC.  267 

doubtless  there  will  be  after  the  millennium  ;  but  so  long  as 
the  lion  and  the  lamb  lie  down  together,  according  to  present 
custom,  with  the  lamb  inside  the  lion,  the  prospects  for  an 
international  code  are  not  very  bright. 

Nor  is  the  Monroe  Doctrine  a  law  either  national  or  inter- 
national. It  is  simply  a  policy  or  another  Declaration  of 
Independence.  Henry  Clay  tried  hard  to  make  it  a  law,  but 
Congress  tabled  his  resolution,  and  the  subject  was  dropped. 
The  Monroe  Doctrine,  however,  is  universally  respected  in  the 
sense  just  stated,  and  Marshal  Bazaine  was  quick  to  recognize 
it  in  the  interest  of  his  imperial  master,  Napoleon  III.,  when 
our  troops  were  sent  to  the  frontiers  of  Mexico  soon  after  our 
Civil  War.  The  French  politely  withdrew,  and  bloodshed  was 
thereby  prudently  avoided.  Other  cases  less  conspicuous  might 
be  quoted,  but  this  will  do  for  an  illustration. 

The  theory  laid  down  by  Mr.  Cleveland,  that  every  nation 
shall  have  its  rights  protected  by  international  law, -is  simply  a 
cosmopolitan  chimera,  yet  a  very  beautiful  and  poetical  idea. 
Every  nation  is  obliged  to  fight  its  own  battles.  If  the  theory 
were  true,  Cuba  would  not  so  long  have  sustained  the  struggle 
single-handed  against  the  power  of  Spain. 

It  remains  now  to  state  briefly  the  origin  of  the  Monroe 
Doctrine.  England  was  chiefly  responsible  for  it,  as  she  sug- 
gested the  idea  through  George  Canning,  her  famous  statesman 
and  diplomatist,  then  Secretary  of  State  for  Foreign  Affairs  and 
afterward  Prime  Minister.  The  Holy  Alliance  had  resolved  to 
restore  to  Ferdinand  VII.  of  Spain  his  former  colonies  in  South 
America;  and  England,  seeing  that  that  would  be  a  serious 
menace  to  her  shipping  interests  and  her  "  rule  of  the  waves," 
nipped  in  the  bud  the  despotic  scheme.  Canning  proposed 
that  England  should  join  the  United  States  in  the  declaration  ; 
but  Monroe  was  too  shrewd  a  diplomatist  for  that,  as  his  French 
training  while  minister  at  the  Tuileries,  together  with  his  per- 
sonal associations  with  Washington,  Jefferson,  John  Adams,  and 
James  Madison,  had  taught  him  to  be  very  circumspect  in 
diplomacy. 

The  Holy  Alliance,  I  scarcely  need  to  state,  was  organized 


268          THE  WALL   STREET   POINT   OF   VIEW. 

by  Russia,  Austria,  and  Prussia  shortly  after  the  battle  of  Wa- 
terloo in  1815,  for  the  ostensible  purpose  of  pacifying  Europe, 
maintaining  the  purity  of  religion,  —  hence  "holy,"  —  return- 
ing to  the  rightful  owners  some  of  the  plunder  of  which  Na- 
poleon had  deprived  them,  and  of  being  prepared  for  the 
contingency  of  another  possible  Napoleon.  Other  nations  of 
Europe  joined  it ;  but  England,  through  Canning,  was  the  first 
to  perceive  that  its  real  object  was  conquest  and  despotic  rule. 
She  therefore  withdrew,  taking  self-protective  action,  as  has 
been  stated.  France  followed  England's  example  a  year  or 
two  afterward,  and  the  Alliance  was  broken  up  a  few  years  later, 
all  its  ambitious  schemes  being  dissipated  ;  after  which  Europe 
became  comparatively  tranquil  for  a  season. 

The  last  paragraph  or  two  in  which  Mr.  Cleveland's  threat  is 
contained,  and  which  caused  the  panic,  are  said  to  have  been 
composed  as  an  addendum  to  the  original  document  as  agreed 
upon  by  Mr.  Cleveland  and  Mr.  Olney.  Perhaps  the  idea  of 
this  unfortunate  addition  to  the  message  entered  the  brain  of 
Mr.  Cleveland  while  on  the  duck-shooting  expedition.  His 
notion  seems  to  have  been  that  if  Great  Britain  got  an  inch  in 
Venezuela  she  would  take  an  ell,  put  to  rout  the  existing  govern- 
ment, and  set  up  the  English  system  in  its  place ;  and  if  it  had 
been  manifest  that  this  was  the  intention  of  Great  Britain,  then 
the  Monroe  Doctrine  would  have  been  applicable  in  the  case, 
as  with  the  French  in  Mexico.  Under  such  conditions,  the 
belligerent  language  of  the  President  might  have  been  justifi- 
able, but  hardly  so  until  all  attempts  at  arbitration  had  been 
exhausted.  There  is  no  evidence,  however,  that  England  had 
any  intention  of  conquest ;  neither  had  she  committed  any 
overt  act  that  the  United  States  could  consider  "  dangerous  to 
its  peace  and  safety,"  which  would  be  necessary  to  create  a 
casus  belli,  according  to  another  clause  in  Mr.  Monroe's  mes- 
sage. Consequently,  to  say  the  least,  Mr.  Cleveland  was  rather 
precipitate  in  his  patriotic  purpose,  and  his  rash  and  premature 
action  cost  this  country  about  $2,000,000,000  in  the  shrinkage 
of  all  securities  and  the  almost  total  suppression  of  credit,  or 
more  than  two  thirds  of  the  amount  of  the  national  debt  at  the 


THE   VENEZUELA   MESSAGE   PANIC.  269 

close  of  the  Civil  War.  Credit  paper  became  of  little  or  no 
value  or  use,  thus  contracting  the  medium  with  which  we  do 
most  of  our  business  at  least  75  per  cent.  Nothing  would 
pass  but  coin  or  its  convertible  equivalent,  and  so  business  was 
brought  to  a  general  condition  of  stagnation.  As  all  the  nations 
of  Europe  regarded  the  concluding  part  of  the  message  as  a 
menace  of  war  which  England  must  regard  either  by  accepting 
or  by  showing  the  white  feather,  business  with  foreign  nations 
was  also  largely  blocked,  and  all  our  foreign  relations  became 
immediately  strained.  We  were  almost  as  much  isolated  for  a 
short  time,  in  a  financial  sense,  as  if  we  had  been  surrounded 
by  a  Chinese  wall. 

The  worst  feature  of  the  predicament  was  that  the  message 
was  popular  before  the  people  began  to  think  and  reflect  upon 
it,  and  this  feeling  was  further  fomented  by  Congress  catching 
the  "Jingo"  contagion.  Speculators  and  investors  were  tum- 
bling over  one  another  in  their  excitement  to  get  rid  of  their  se- 
curities and  to  obtain  gold,  no  matter  at  what  sacrifice,  for  the 
purpose  of  hoarding  it  in  safe-deposit  boxes  against  threatened 
business  disaster  and  the  probable  upheaval  of  thrones  and 
kingdoms  in  prospect ;  for  if  war  should  break  out  between 
two  of  the  greatest  civilized  nations  in  the  world,  there  was  no 
knowing  where  it  would  end.  Money,  in  consequence  of  this 
state  of  affairs,  became  stringent,  and  our  securities  were  sold 
by  European  holders  as  fast  as  they  could  get  rid  of  them,  the 
gold  meantime  flowing  from  our  shores  in  a  steady  and  rapid 
stream.  The  United  States  Treasury  reserve  of  $100,000,000, 
melted  away  like  snow  before  the  noonday  sun  until  it  fell  to 
$49,000,000,  and  the  faster  it  decreased  the  more  the  panic 
increased,  and  the  tighter  grew  the  money  market,  so  that  there 
was  scarcely  a  spot  in  our  whole  broad  land  that  the  panic  did 
not  cover.  Failures  of  bankers,  brokers,  and  merchants  were 
reported  daily  and  sometimes  hourly  ;  there  was  a  tremendous 
run  on  nearly  all  the  savings  banks,  and  general  disorganization 
in  the  whole  financial  world  seemed  imminent. 

Lord  Salisbury  may  have  felt  like  William  Pitt  at  the  breaking 
out  of  the  European  campaign  of  his  day,  when  the  powers  of 


270          THE   WALL   STREET   POINT   OF   VIEW. 

Europe  were  beginning  to  league  themselves  against  Napoleon. 
"Roll  up  that  map  of  Europe,"  said  Pitt,  "it  will  not  be  required 
for  the  next  ten  years."  His  words  were  truly  prophetic,  and 
the  thought  of  his  prophecy  being  fulfilled,  as  it  was  afterward, 
is  said  to  have  caused  his  death.  There  was  no  fear  of  such 
a  fatal  result,  however,  in  the  case  of  Salisbury.  He  is  not  so 
sensitive ;  yet  the  circumstances  afford  food  for  very  serious 
reflection  to  the  people  of  the  United  States,  when  it  is  con- 
sidered that  Mr.  Cleveland's  faux  pas,  made  with  honest  inten- 
tions and  but  slightly  wrong  in  theory,  cost  this  country  nearly 
one  half  of  the  aggregate  debt  incurred  by  England  during  her 
fifteen  years'  war  with  Napoleon,  including  the  period  that  she 
assisted  the  allies  with  money  and  munitions  of  war  when  she 
was  not  actually  in  the  field  herself. 

This  country  had  never  before  met  such  a  sudden  revolution 
in  business.  The  panic  of  1873  nad  hitherto  been  considered 
quick  and  expansive  in  its  action,  but  it  hardly  compared  with 
that  of  1895.  This  latter  reduced  business  transactions  gen- 
erally to  a  retail  basis,  a  kind  of  hand-to-mouth  operation, 
and  on  purely  cash  principles.  The  strained  relations  between 
buyer  and  seller  were  of  a  very  disagreeable  character,  making 
commercial  transactions  quite  irritating,  and  threatening  to  sap 
the  foundations  of  our  prosperous  system  of  trade  and  com- 
merce. Business  was  thus  pent  up  within  exceedingly  narrow 
limits,  and  profits  accordingly  must  have  been  reduced  to  the 
very  lowest  ebb.  All  securities,  as  a  matter  of  course,  experi- 
enced a  tremendous  fall  in  prices,  many  of  them  seeking  a  lower 
level  than  in  the  panic  of  1893.  That  panic  was  not  to  be  com- 
pared to  the  Venezuela  message  panic,  because  it  did  not  carry 
with  it  a  total  annihilation  of  credits,  which  the  later  hobgoblin 
of  war  did. 

The  paralysis  in  business  that  ensued,  growing  out  of  this 
terrible  disaster,  was  continued  without  much  visible  abatement 
up  to  the  time  of  the  Chicago  Free  Silver  Convention,  July  9, 
1896.  The  agony  had  been  endured  by  the  most  long-suffering 
people  on  the  face  of  the  earth  from  December  17,  1895,  ^ie 
date  of  the  message.  It  is  not  an  exaggeration,  I  think,  nor  am 


THE   VENEZUELA   MESSAGE   PANIC.  2/1 

I  guilty,  I  believe,  of  attaching  too  much  importance  to  that 
part  of  the  message  productive  of  the  panic,  when  I  say  that  it 
was  mainly  due  to  it  that  a  few  men,  some  of  them  quite  ob- 
scure previously  and  others  notorious  for  their  revolutionary 
predilections,  were  enabled  at  Chicago  to  organize  the  new 
democracy. 


CHAPTER   XXXV. 

OUR  NATION'S  CREDIT. 

Why  should  this  credit,  as  illustrated  in  the  market  value  of  our  bonds,  not 
be  on  as  high  a  plane  as  the  credit  of  other  nations  ?  —  A  plea  for  the 
Sherman  Silver  Law  and  how  it  was  instrumental  in  tiding  the  financial 
world  over  the  Baring  panic.  —  A  brief  retrospect  of  bond  issues  and 
cognate  subjects  of  national  interest. 


EGARDING  the  credit  of  our  nation  there  seems  to  have 
_LV  been  a  great  deal  of  misconception  and  loose  thinking  in 
the  past.  I  here  reproduce  a  few  points  which  I  published  some 
time  ago  on  this  and  kindred  subjects,  viewing  them  from  that 
common-sense  point  of  view  which  everybody  —  the  ordinary 
business  man,  the  farmer,  and  the  mechanic  —  can  understand 
as  easily  as  the  professional  financier.  There  may  be,  however, 
certain  college  and  other  financial  professors,  men  who  have 
been  in  the  habit  of  bending  and  torturing  statistics  to  dovetail 
with  preconceived  opinions  and  theories,  who  will  not  under- 
stand the  subject  from  my  point  of  view. 

Though  I  am  an  uncompromising  advocate  of  the  gold  stand- 
ard under  existing  conditions,  yet  I  am  not  afraid  to  do  justice 
to  silver  and  silver  legislation  internationally  considered,  through 
fear  that  some  cranky  critic,  who  looks  superficially  on  financial 
subjects,  should  charge  me  with  inconsistency. 

The  Sherman  Silver  Law,  for  instance,  served  an  excellent 
purpose  that  could  probably  not  have  been  achieved  at  the 
time  by  any  other  instrumentality,  but  it  was  right  to  repeal  an 
objectionable  part  of  it  when  through  altered  circumstances 
and  the  march  of  events  it  became  really  objectionable. 
Whether  the  time  of  repeal  was  exactly  opportune  or  not  is  a 
point  which  has  afforded  scope  for  controversy,  and  which  I 
have  discussed  in  another  chapter  and  need  not  therefore 

272 


OUR   NATION'S   CREDIT.  273 

refer  to  further ;  but  the  law  was  justifiable  in  itself  and  exhib- 
ited great  legislative  wisdom  in  its  author. 

The  highest  credit  nations  of  Europe  are  England  and  France. 
They  have  never  issued  promise-to-pay  obligations  bearing  less 
than  3  per  cent,  interest,  except  when  England,  years  ago, 
reduced  the  rate  on  a  part  of  her  consols  to  2|  per  cent., 
which  was  the  initial  cause  of  the  Baring  failure. 

Almost  everything  that  has  gone  wrong  financially  on  this 
side  since  that  memorable  failure  of  the  Barings  has  been 
charged  to  the  Sherman  Silver  Law,  especially  so  as  to  the 
return  of  our  securities  and  the  large  shipments  of  gold.  The 
charge  is  far  from  being  well  founded.  The  Sherman  Law  cer- 
tainly did  not  have  anything  to  do  with  the  Barings'  disaster, 
and  it  was  that  catastrophe  which  sent  our  stocks  and  bonds 
back,  for  money  had  to  be  raised  in  England  by  the  holders  of 
these  properties,  because  they  were  almost  the  only  ones  that 
could  find  a  ready  market.  The  Silver  Law  did  not  enter  into 
the  question  ;  it  was  simply  a  matter  of  raising  money.  These 
people  had  Argentine,  Brazilian,  Turkish,  Spanish,  Russian, 
Egyptian,  and  numerous  other  securities  of  like  character,  but 
they  were  unsalable,  so  there  was  no  alternative  but  to  sell 
their  American  stocks  and  bonds;  therefore  the  gold  that 
went  to  pay  for  them  did  not  go  because  of  the  Sherman  Silver 
Law  or  from  the  fear  of  its  consequences  at  that  time.  No  one 
will  say  that  the  Sherman  Silver  Law  had  anything  to  do  with 
the  Panama  swindle  and  scandal,  which  came  so  near  creating 
a  revolution  in  France.  The  fear  of  this  caused  the  French 
people  to  draw  their  money  from  the  banking  institutions  and 
hoard  it,  the  Bank  of  France  being  compelled  thereby  to 
recuperate  her  gold  reserve  by  buying  gold  from  America  and 
drawing  vast  sums  from  us  in  consequence.  Who  can  pos- 
sibly charge  that  the  Sherman  Silver  Law  was  the  incentive 
to  Austria  for  selling  her  4  per  cent,  bonds,  and  with  the 
proceeds  buying  our  gold  at  a  premium,  and  in  that  way 
taking  it  from  us  as  so  much  merchandise  to  be  bought  by 
weight  ? 

Having  given  the  causes  as  above  for  our  gold  shipments,  — 


2/4          THE   WALL   STREET   POINT   OF  VIEW. 

namely,  the  natural  sequence  and  after  effect  of  the  Baring 
failure  panic,  the  threatened  revolution  in  France  growing  out 
of  the  Panama  scandal,  and  last  but  not  least,  the  Austrian 
scheme  for  placing  that  nation  on  a  gold  basis,  —  I  unhesitatingly 
assert  that  these  were  legitimate  and  substantial  reasons  to 
account  for  the  departure  of  the  yellow  metal,  and  not  the 
Sherman  Law. 

What,  then,  are  the  actual  facts?  When  summed  up,  they 
are  these :  the  Sherman  Silver  Law,  as  a  matter  of  fact,  did 
excellent  service,  and  without  it  an  immense  number  of  bank- 
ing institutions,  railroad  companies,  and  merchants  in  this 
country  would  have  come  to  grief;  in  other  words,  the  credit 
is  due  to  the  Sherman  Silver  Law  for  not  only  carrying  us 
through  trouble,  but  for  helping  England,  France,  and  Austria. 
The  new  money  created  by  the  sanction  of  the  1890  Silver  Law 
made  it  possible  for  this  country  to  sustain  itself,  and  at  the 
same  time  to  send  gold  to  foreign  countries. 

Notwithstanding,  however,  that  the  Sherman  Silver  Law  has 
done  so  much  for  us  as  a  nation,  I  am  of  the  opinion  that  it 
was  wise  legislation  to  repeal  the  purchasing  clause  of  the  said 
law,  for  we  have  enough  of  that  kind  of  money  in  circulation 
now. 

The  leading  nations  have  come  down  to  a  business  basis, 
requiring  international  action  as  the  remedy  for  their  difficul- 
ties. It  has  become  necessary  to  utilize  their  resources 
in  the  best  possible  way,  and  money  as  a  power  is  now 
recognized  as  the  most  potential  influence  in  connection  with 
national  alliances.  Every  country  has  its  own  products,  some 
more  or  less  than  others,  the  surplus  or  deficit  of  which  is 
destined  at  no  distant  day  to  be  regulated  by  commercial  recip- 
rocal treaties.  Such  interests  will  be  more  influential  and  pow- 
erful in  cementing  friendships  between  nations  than  are  armies 
and  navies,  the  change  being  from  one  of  force  to  that  of 
mutual  interests.  War  methods  belong  to  the  past,  and  after 
present  troubles  are  adjusted,  will  soon,  by  common  consent,  be 
relegated  to  the  rear  to  make  way  for  offensive  and  defensive 
reciprocity  commercial  treaties,  which  will  insure  prolonged  peace 


OUR   NATION'S   CREDIT.  275 

and  prosperity.  The  true  spirit  between  nations  should  be  to 
exchange  commodities  with  each  other,  and  not  bullets ;  and 
not  to  engage  in  the  endeavor  to  grab  each  other's  gold  by 
its  purchase  or  other  sharp  methods.  There  is  gold  enough 
for  all  if  mutual  consideration  and  forbearance  are  exercised. 
Mutual  confidence  and  a  fair  spirit  of  reciprocity  between 
nations  will  make  the  world's  supply  of  gold  ample  to  provide 
for  all  legitimate  exchanges,  internally  and  externally,  with  the 
nations  now  on  the  single  standard  basis ;  but  not  to  provide 
for  a  selfish  spirit  of  hoarding  at  the  same  time.  To  prevent 
the  excessive  shipments  of  gold  periodically,  the  five  great 
nations  —  England,  France,  Germany,  Russia,  and  the  United 
States  —  should  adopt  an  international  note  currency  or  a  i^  per 
cent,  gold  bond  issue,  not  to  exceed  say  $500,000,000,  each  to 
issue  $100,000,000,  the  five  nations  to  be  equally  responsible 
for  the  principal  and  interest  by  a  mutual  agreement.  These 
obligations,  backed  by  such  high  credit,  would  take  the  place 
of  gold  exports  and  imports.  Gold  would  be  no  better  as  a 
remittance  —  as  a  matter  of  fact,  not  nearly  as  desirable.  The 
notes  or  bonds  would  be  an  international  currency,  and  would 
provide  a  substitute  for  gold  in  a  settlement  of  balances  be- 
tween nations.  It  would  do  away  almost  altogether  with  the 
present  clumsy  method  of  shipping  gold  from  one  country  to 
another,  and  a  few  weeks  afterward  bringing  it  back  again,  as 
is  now  the  usual  practice.  It  has  really  come  to  be  a  matter 
of  dollars  and  cents  with  nations,  especially  with  those  that  are 
overburdened  with  debt,  which  includes  most  of  them.  These 
increasing  burdens  must  eventually  make  it  imperative  to  aban- 
don the  large  standing  armies  and  navies,  and  to  substitute 
commercial  treaties. 


CHAPTER   XXXVI. 

OUR  NATION'S  NEW  DEPARTURE. 

The  influence  of  our  recent  victories  on  the  minds  and  purposes  of  other 
nations.  —  Significance  of  the  Czar's  note  on  disarmament.  —  Was  our 
war  with  Spain  justifiable?  —  The  part  played  by  the  President  and 
Congress  in  the  war. — The  problem  of  our  new  possessions.  —  What 
shall  we  do  with  them? 

ON  New  Year's  Day,  1898,  it  would  have  been  difficult  to 
imagine  that  this  country  in  so  short  a  time  could  have 
exercised  such  an  immense  influence  on  the  financial  and  polit- 
ical concerns  of  the  world  at  large  as  it  does  to-day.  One 
great  manifestation  of  this  universal  influence  is  the  recent 
Peace  Congress  at  The  Hague  which  met  in  May,  1899,  at  the 
request  of  the  Czar  of  Russia. 

It  is  evident  that  the  war  of  the  United  States  with  Spain 
forced  this  movement  to  manifest  itself  much  sooner  than  it 
would  have  done  if  international  affairs  had  gone  forward  in  the 
old  channels.  The  idea  of  the  United  States  becoming  an 
empire,  in  power  if  not  in  name,  has  given  the  nations  fresh 
impetus  for  thought,  and  has  very  probably  affected  some  of 
them  with  feelings  of  alarm. 

The  formation  of  an  empire,  anywhere,  has  always  been  a  dis- 
turbing element  to  the  rest  of  the  world.  It  was  so  with  that 
of  ancient  Rome,  also  with  that  of  Charles  V.  of  Germany,  with 
that  of  Napoleon  I. ;  and,  though  the  empire  of  Great  Britain 
has  been  of  gradual  formation,  its  extension  has  been  a  prolific 
cause  of  serious  unrest  to  the  nations,  and  especially  to  Russia. 

In  the  latter  instance  the  feeling  of  uneasiness  has  been 
mutual,  and  a  constant  source  of  irritation  to  both  nations, 
despite  the  soothing  influences  of  family  relations  and  inter- 
marriages between  the  two  royal  houses ;  and  this  feeling  and 
those  strained  relations  have  been  particularly  emphasized  since 

276 


OUR   NATION'S   NEW   DEPARTURE.  277 

her  Majesty,  Queen  Victoria,  assumed  the  title  of  Empress  of 
India. 

Now  that  an  alliance  between  the  United  States,  Russia's 
best  friend,  and  Great  Britain,  Russia's  greatest  possible  enemy, 
has  been  suggested,  and  considering  the  evidence  that  the 
United  States  has  recently  given  to  the  world  of  its  great  pos- 
sibilities in  the  way  of  martial  development  and  power  on 
both  sea  and  land,  it  is  not  to  be  wondered  at  that  Russia, 
whose  statesmen  and  diplomatists  are  the  most  subtle  and  far- 
seeing  in  the  world,  should  advise  the  wisest  course  in  diplomacy 
to  avert  unhappy  collisions  between  any  of  the  civilized  nations 
in  the  future. 

Europe  may  laugh  at  the  Utopian  idea  of  young  Nicholas ; 
but  he  is,  in  all  likelihood,  only  the  mouthpiece  for  the  expres- 
sion of  the  concentrated  wisdom  of  his  advisers.  The  idea  of  the 
happy  and  prosperous  state  of  things  that  would  ensue  were 
the  Czar's  suggestion  put  into  practice,  is  so  overwhelming  in 
the  vastness  of  its  conception  and  the  multitude  of  its  blessings 
to  humanity,  that  minds  accustomed  to  think  of  nations  in  arms 
can  hardly  grasp  the  nature  of  the  proposed  change. 

Let  us  try  to  conceive  of  a  burden  of  $1,000,000,000  taxa- 
tion being  at  once  lifted  from  the  shoulders  of  350,000,000 
of  people,  and  at  the  same  time  5,000,000  of  the  flower  of 
these  people  turned  to  the  arts  of  peace  and  profitable  pro- 
duction, instead  of  living  on  the  production  of  those  less 
eligible  for  toil,  and  that  simply  for  the  purpose  of  being  in 
constant  training  to  kill  their  fellow-men  with  the  greatest 
possible  rapidity. 

The  theory  that  the  statesmen  of  Russia  are  opposed  to  the 
views  of  the  Czar  does  not  appear  to  me  to  be  tenable.  The 
late  Count  Maravieff  and  some  of  his  colleagues  may  have  only 
acted  that  part  for  the  sake  of  effect,  pursuant  to  some  secret 
purpose. 

The  formerly  avowed  policy  of  France  on  the  question 
of  Alsace-Lorraine  was  of  a  very  narrow  character,  although 
natural ;  but  the  outcome  of  this  conference  has  already  given 
breadth  to  her  national  views,  as  well  as  to  those  of  other 


278          THE   WALL   STREET   POINT   OF  VIEW. 

nations.  It  must  be  remembered  that  the  provinces  about 
which  France  felt  so  patriotically  sore  were  wrested  by  her 
from  Germany  less  than  two  centuries  ago. 

The  conference  would  have  been  foredoomed  to  failure,  if 
the  settlement  of  boundary  lines  had  been  a  preliminary  part 
of  the  programme,  —  a  principle  that  was  well  illustrated  at 
the  Congress  of  Vienna  in  1815.  At  that  time  the  represent- 
atives of  the  nations  of  Europe  had  just  succeeded  in  getting 
into  a  complete  muddle  on  the  boundary  question,  when  they 
were  suddenly  relieved  by  the  escape  of  Napoleon  from  Elba, 
which  upset  all  their  plans  and  calculations  and  postponed 
this  question  indefinitely.  If  there  is  any  hope  for  the  Czar's 
plan  for  &  paradise  on  earth,  present  boundaries  must  be  held 
sacred.  Any  boundary  line  settlement  that  could  possibly  be 
proposed  would  leave  international  affairs  in  as  bad  a  condition 
as  that  in  which  they  now  stand,  and  would  entail  a  series  of 
settlements  running  back  to  the  days  of  Julius  Caesar,  and  then 
even  there  would  arise  a  new  starting-point,  calling  for  the 
redress  of  older  grievances  back  to  the  Creation,  perhaps,  or  at 
least  as  far  as  the  Deluge. 

It  may  be  of  national  interest  in  contemplating  this  mag- 
nificent reform,  or  rather  peaceful  revolution  of  the  nations,  to 
take  a  retrospect  of  the  contribution  of  our  own  country  to  the 
proposed  change  ;  but  before  discussing  this  matter  it  is  proper 
to  place  before  the  mind  of  the  reader  the  exact  utterance  of 
the  Czar. 

The  press  at  first  jumped  to  the  conclusion  that  he  actually 
proposed  disarmament,  though  his  words  were  only  suggestive 
of  it.  He  simply  suggested  that  the  powers  of  the  world  should 
have  a  conference  on  the  subject  of  reducing  armaments  and 
lessening  their  expenses.  The  full  text  of  the  note  was  as  fol- 
lows :  — 

"ST.  PETERSBURG,  AUGUST  24,  1898. 
BY  COUNT  MARAVIEFF,  AS  FOREIGN  MINISTER: 

"  The  maintenance  of  general  peace  and  the  possible  reduction  of 
the  excessive  armaments  which  weigh  upon  all  nations  present  them- 
selves in  existing  conditions  to  the  whole  world  as  an  ideal  toward 


OUR   NATION'S   NEW   DEPARTURE.  279 

which  the  endeavors  of  all  governments  should  be  directed.  The 
humanitarian  and  magnanimous  ideas  of  His  Majesty  the  Emperor, 
my  august  master,  have  been  won  over  to  this  view  in  the  convic- 
tion that  this  lofty  aim  is  in  conformity  with  the  most  essential 
interests  and  legitimate  views  of  all  the  powers ;  and  the  imperial 
government  thinks  the  present  moment  would  be  very  favorable  to 
seeking  the  means. 

"  International  discussion  is  the  most  effectual  means  of  insuring 
all  peoples  benefit  —  a  real,  durable  peace,  above  all,  putting  an  end 
to  the  progressive  development  of  the  present  armaments. 

"  In  the  course  of  the  last  twenty  years  the  longing  for  general 
appeasement  has  grown  especially  pronounced  in  the  consciences  of 
civilized  nations ;  and  the  preservation  of  peace  has  been  put  for- 
ward as  an  object  of  international  policy.  It  is  in  its  name  that  great 
States  have  concluded  between  themselves  powerful  alliances. 

"  It  is  the  better  to  guarantee  peace  that  they  have  developed  in 
proportions  hitherto  unprecedented  their  military  forces,  and  still 
continue  to  increase  them,  without  shrinking  from  any  sacrifices. 

"  Nevertheless,  all  these  efforts  have  not  yet  been  able  to  bring 
about  the  beneficent  result  desired  —  pacification. 

"  The  financial  charges  following  the  upward  march  strike  at  the 
very  root  of  public  prosperity.  The  intellectual  and  physical  strength 
of  the  nation's  labor  and  capital  are  mostly  diverted  from  their  natu- 
ral application  and  are  unproductively  consumed.  Hundreds  of 
millions  are  devoted  to  acquiring  terrible  engines  of  destruction, 
which,  though  to-day  regarded  as  the  last  work  of  science,  are  des- 
tined to-morrow  to  lose  all  their  value  in  consequence  of  some  fresh 
discovery  in  the  same  field.  National  culture,  economic  progress, 
and  the  production  of  wealth  are  either  paralyzed  or  checked  in 
development.  Moreover,  in  proportion  as  the  armaments  of  each 
power  increase,  they  less  and  less  fulfill  the  object  the  government 
has  set  before  themselves. 

"  The  economic  crisis,  due  in  great  part  to  the  system  of  arma- 
ments 'a  routrancej  and  the  continual  danger  which  lies  in  this 
massing  of  war  material,  are  transforming  the  armed  peace  of  our 
days  into  a  crushing  burden  which  the  people  have  more  and  more 
difficulty  in  bearing. 

"  It  appears  evident  that  if  this  state  of  things  were  to  be  pro- 
longed it  would  inevitably  lead  to  the  very  cataclysm  it  is  desired  to 
avert,  and  the  horrors  whereof  make  every  thinking  being  shudder  in 
advance. 

"  To  put  an  end  to  these  incessant  armaments  and  to  seek  the 


280 


THE  WALL   STREET   POINT   OF  VIEW. 


means  of  warding  off  the  calamities  which  are  threatening  the  whole 
world  —  such  is  the  supreme  duty  to-day  imposed  upon  all  States. 

"  Filled  with  this  idea,  His  Majesty  has  been  pleased  to  command 
me  to  propose  to  all  the  governments  whose  representatives  are 
accredited  to  the  imperial  court  the  assembling  of  a  conference  which 
shall  occupy  itself  with  this  grave  problem. 

"  This  conference  will  be,  by  the  help  of  God,  a  happy  presage 
for  the  century  which  is  about  to  open.  It  would  converge  into  one 
powerful  focus  the  efforts  of  all  States  sincerely  seeking  to  make 
the  great  conception  of  universal  peace  triumph  over  the  elements 
of  trouble  and  discord,  and  it  would  at  the  same  time  cement  their 
agreement  by  a  corporate  consecration  of  the  principles  of  equity 
and  right  whereon  rest  the  security  of  States  and  the  welfare  of 
peoples." 

In  this  connection  the  following  table  speaks  for  itself :  — 
ARMED   POWER   OF   EUROPE. 


PEACE  FOOTING — 


LAND  FORCES. 


Men  . 

Horses 

Guns 


Germany.  France. 

607,308  559,260 

108,800  192,200 

2,967  3,480 


Italy. 

216,235 

58,760 

1,986 


Austria- 
Hungary.  Russia.     England.    Turkey. 

228,574 


277, '92     1,743,244     220,199 

67,400        176,600     

2,712  2,672  720 


696 


WAR  FOOTING  — 

Men  ....  5,166,592  4,849.572  2,181,790  1,767,087  5,008,284  637,863  1,061,862 

Horses  .     .     .      201,200  192,200  55,8oo  86,740  295,718  -  90,600 

Guns      .     .     .         4,588  5,024  1,986  2,712  6,084  696 

NAVAL  POWER. 

Austria- 
England.    France.    Russia.   Germany.    Italy.  Hungary.  Turkey. 

Armored  ships  ....         88 

Guns 3,298 

Cruisers  and  gunboats  .        188 

Guns 3,o86 

Torpedo  boats  ....        293 

Men 79,947 

Reserves 83,000 

This  is  a  statistical  view  of  the  formidable  forces  which  cause 
such  a  terrible  drain  on  the  resources  of  Europe,  and  keep  the 
greater  number  of  the  people  in  bondage  to  support  it.  A 
study  of  the  figures  and  of  the  possibilities  in  expense,  human 


49 

60 

42 

25 

J9 

18 

1,627 

1,343 

898 

925 

488 

312 

no 

37 

23 

25 

18 

20 

1,547 

530 

380 

547 

75 

121 

266 

230 

192 

209 

87 

42 

80,920 

40.532 

21,513 

21,724 

13,313 

22,276 

84,350 

45,ooo 

37,000 

19,600 

2,000 

36,000 

OUR   NATION'S   NEW   DEPARTURE.  281 

suffering,  and  slaughter  which  they  imply,  is  sufficient  to  appall 
the  stoutest  heart,  whether  it  beats  in  the  bosom  of  the  proud- 
est autocrat  or  the  most  humble  laborer. 

Let  us  return  now  to  the  part  which  our  own  country  has 
played  in  prompting  the  note  of  the  Czar,  suggesting  permanent 
relief  from  this  overwhelmingly  oppressive  condition. 

In  the  first  place,  we  have  set  a  noble  example  to  the  world 
since  our  own  Civil  War  by  the  reduction  of  our  armaments 
to  a  point  that  demonstrated  our  temerity  more  than  our 
prudence,  a  fact  which  the  late  Spanish  War  clearly  showed. 
Though  we  came  out  of  that  struggle  victorious,  yet,  a  few  years 
prior  to  the  sudden  reorganization  of  our  navy,  Spain's  superior 
fleet  might  have  made  it  entirely  practical  for  General  Weyler 
to  have  carried  out  his  proud  boast  of  invading  this  country 
with  two  hundred  thousand  men. 

We  had  a  providential  escape,  coming  out  triumphant  beyond 
precedent  in  the  history  of  wars,  despite  the  fact  that  our  army 
was  overtaken  by  disease  in  Cuba,  which,  on  account  of  our 
hasty  and  inadequate  preparations  for  war,  we  were  not  pre- 
pared to  meet  until  its  fatal  effects  had  been  severely  felt. 

That  incompetency  should  have  been  displayed  in  some 
parts  of  the  commissariat  and  the  medical  department  of  an 
army  so  hastily  organized  for  foreign  service  as  was  ours,  is 
not  to  be  wondered  at.  Such  accidents  are  likely  to  occur  in 
the  best  regulated  armies,  as  with  the  British,  for  instance,  in 
the  Crimea  in  1854,  when  the  greater  part  of  Lord  Raglan's 
command  were  starving  and  half  naked  for  days,  while  plenty 
of  food  and  clothing  was  within  a  few  miles  of  them.  A  similar 
mishap,  only  on  a  much  larger  scale,  occurred  to  the  French 
army  in  the  campaign  which  ended  disastrously  at  Sedan  in 
1870.  Errors,  either  of  oversight  or  by  lack  of  full  preparation, 
are  seemingly  bound  to  occur  in  connection  with  nearly  all 
military  operations,  most  especially  those  which  are  unduly 
hastened  by  a  rapid  march  of  events.  Complaints  have  been 
numerous  during  the  South  African  campaign. 

Some  persons  are  inclined  to  lay  the  blame  for  the  mistakes 
in  our  service  on  President  McKinley ;  but  it  was  impossible 


282          THE   WALL   STREET   POINT   OF   VIEW. 

for  any  man  to  exercise  the  superhuman  individual  foresight 
necessary  to  detect  the  incompetency  of  untried  subordinates 
in  every  department  of  a  rapidly  mobilized  military  service ; 
while  his  calmness,  courage,  and  promptitude,  so  far  as  the  con- 
duct of  the  war  itself  was  concerned,  were  well-nigh  faultless. 

The  President  counseled  peace  at  any  price  not  inconsistent 
with  national  honor,  and  left  every  possible  loophole  in  his 
power  for  Spain  to  escape  from  the  trouble  which  she  had 
brought  upon  herself,  without  entailing  further  disgrace  to 
Spanish  arms  and  humiliation  to  Spanish  chivalry ;  but  Spain 
in  her  irrational  pride  ignored  all  such  opportunities,  and  in- 
terpreted what  was  meant  for  her  best  interests  into  an  insult 
to  her  historic  greatness  and  invincible  valor.  Her  answer  to 
all  amicable  and  soothing  propositions  was,  "  No  !  we  will  fight 
to  the  bitter  end."  When  she  did  yield  for  a  brief  period  to 
the  appearance  of  reason  and  a  possible  settlement  on  rational 
principles  through  the  scheme  of  autonomy,  she  was  not  sin- 
cere, but  only  playing  at  diplomacy  to  deceive  our  people 
and  gain  time  with  the  hope  of  European  intervention.  This 
was  fully  revealed  in  the  private  correspondence  of  Minister 
de  Lome  to  the  editor  of  the  Madrid  Herald,  which  was  acci- 
dentally discovered  by  a  Cuban  and  handed  over  to  our 
government. 

In  that  correspondence  Senor  de  Lome  ridiculed  our  Con- 
gress and  statesmen,  and  used  very  disrespectful  and  abusive 
language  concerning  President  McKinley.  He  was  therefore 
regarded  as  persona  non  grata,  and  before  notification  to  this 
effect  could  reach  his  government  he  prudently  resigned.  On 
his  way  home,  however,  he  stopped  in  Canada  with  the  object 
of  concocting  mischief  against  this  country,  until  he  was  in- 
formed by  the  government  of  that  country  that  his  presence  in 
the  Dominion  was  undesirable. 

About  this  time,  February  15,  1898,  was  perpetrated  that 
horrible  crime,  the  blowing  up  of  the  battleship  Maine  in  the 
harbor  of  Havana,  where  she  was  anchored  on  a  friendly  visit. 
That  tragic  event,  in  which  266  out  of  a  crew  of  404  of  our 
brave  sailors  and  marines,  including  two  officers,  perished, 


OUR   NATION'S   NEW   DEPARTURE.  283 

caused  a  shock  of  consternation  and  horror  throughout  the 
civilized  world.  It  was  then  demonstrated  to  every  right- 
thinking  mind  that  patience  with  Spanish  treachery  and  cruelty 
had  ceased  to  be  a  virtue,  and  our  eighty  millions  of  united 
people  joined  with  one  voice  in  a  cry  for  retribution.  Public 
opinion  everywhere  pointed  to  Spanish  officials  of  Cuba  as 
the  perpetrators  of  the  dastardly  deed.  A  court  of  inquiry 
consisting  of  Captain  W.  T.  Sampson,  Captain  F.  E.  Chadwick, 
Lieutenant  Commander  Potter,  and  Lieutenant  Commander 
Marix  investigated  the  matter  for  six  weeks.  They  found  that 
the  explosions  happened  externally,  and  that  there  had  been  no 
carelessness  on  the  part  of  the  crew  of  the  Maine ;  but  the  court 
was  unable  to  fix  the  responsibility.  This  had  no  effect,  how- 
ever, in  removing  suspicion  from  the  Spanish  officials,  and  the 
whole  country  became  impatient  with  the  President  because 
he  did  not  declare  war  against  Spain  at  once. 

The  destruction  of  the  Maine  was  undoubtedly  the  crown- 
ing crime  which  precipitated  the  war,  though  the  cause  was 
diplomatically  and  officially  attributed  to  the  cruel  domination 
of  Spain  in  Cuba  and  her  refusal  to  relinquish  the  island. 
That  the  war  was  justifiable  on  account  of  Spain's  misrule  in 
Cuba,  most  of  the  nations  of  Europe  admit.  It  is  not  difficult, 
however,  to  produce  positive  evidence  in  order  that  the  justice 
of  Uncle  Sam's  intervention  may  be  made  clear  to  all  men. 

I  shall  pass  over  the  details  of  the  case  of  the  Virginius,  in 
1871,  in  which  Spam's  officials  in  Cuba  defiantly  shot  down 
more  than  thirty  American  citizens.  No  punishment  was  in- 
flicted by  Spain  on  these  colonial  assassins,  and  we  had  no 
modern  navy  then. 

Every  attempt  at  autonomy  in  Cuba  during  the  succeeding 
years,  up  to  1896,  was  a  failure  and  generally  a  farce.  In  the 
last  of  the  several  wars  waged  for  Cuban  independence,  Cap- 
tain General  Campos,  one  of  the  most  humane  officials  ever 
sent  out  by  Spain,  acknowledged  that  all  efforts  to  reduce  the 
Cubans  to  subjection  had  failed,  and  he  returned  home  at  the 
beginning  of  1896.  The  chief  complaint  against  him  was  that 
he  was  too  humane.  He  wished  to  adhere  as  closely  as  possi- 


284         THE  WALL   STREET   POINT   OF  VIEW. 

ble  to  the  rules  of  civilized  warfare,  and  that  policy  was  insuffi- 
cient to  subjugate  Cuba. 

So  Campos  was  succeeded  by  a  man  who  had  gained  a 
bad  preeminence  for  human  butchery  and  nameless  cruelties 
among  the  semi-civilized  and  savage  population  of  the  Philip- 
pine Islands,  from  whom  he  had  also  replenished  his  own  coffers 
to  the  extent  of  several  million  dollars,  filched  from  the  natives 
and  politicians  of  those  wealthy  islands.  The  name  of  this 
man  is  Valeriano  Weyler,  called  by  way  of  distinction  "  Butcher 
Weyler,"  a  cognomen  which  his  actions  in  Cuba,  to  say  noth- 
ing of  his  notorious  career  in  the  Philippines,  fully  justify. 

Weyler  conceived  one  of  the  most  fiendish  schemes  that  has 
probably  ever  entered  into  the  heart  of  man,  for  the  purpose 
of  putting  Cuba  fully  in  the  power  of  Spain.  It  was  nothing 
less  than  extermination  by  starvation  of  half  a  million  of  peo- 
ple, most  of  whom  were  peaceable  and  uncomplaining,  and  who 
were  tilling  the  soil  industriously  for  that  portion  of  its  product 
barely  sufficient  to  maintain  them,  the  residue  being  undoubt- 
edly divided  among  Weyler  and  his  political  colleagues,  except 
a  small  surplus  that  was  sent  to  Spain.  This  scheme  of  whole- 
sale assassination  excited  universal  horror  and  indignation 
when  the  nature  of  it  became  known ;  but  prior  to  that  more 
than  100,000  had  died  in  the  agonies  of  hunger  and  the  dis- 
eases caused  by  starvation.  These  people  were  driven  into 
the  cities  and  walled  in  by  cordons  of  soldiers  until  they  found 
relief  in  death.  The  total  number  in  the  six  provinces  that 
perished  in  this  way  probably  exceeded  300,000.  The  idea 
was  to  starve  the  pacificos,  in  order  that  the  Cuban  insurgents 
might  no  longer  be  able  to  obtain  food  to  enable  them  to  con- 
tinue the  war.  Spain  herself  became  so  disgusted  at  this  vil- 
lainous mode  of  warfare,  and  ashamed  at  the  universal  outcry 
against  it,  that  she  ordered  Weyler  home,  and  then  an  effort 
was  made  through  General  Blanco,  who  succeeded  him,  to  save 
the  remnant  of  these  miserable  people,  called  reconcentrados ; 
but  many  more  perished  before  relief  could  reach  them,  though 
several  expeditions  were  sent  from  the  United  States  with  food, 
money,  and  medicine. 


OUR   NATION'S   NEW   DEPARTURE.  285 

In  this  last  dire  extremity  it  is  worthy  of  note  that  those 
truculent  volunteers,  the  Cuban  soldiers  of  Spain,  exhibited 
their  fiendish  spirit  in  a  diabolical  manner  toward  the  poor 
pacificos.  When  these  starving  people  were  seeking  some 
wood  to  cook  the  food  which  we  had  sent  them,  the  volunteers 
would  not  permit  them  to  have  the  fuel,  but  told  them  sneer- 
ingly  to  let  the  "  Yankee  pigs  "  who  sent  them  the  food  supply 
them  with  wood,  and  shoved  the  miserable  creatures  aside  with 
their  bayonets. 

These  cruelties  and  numerous  others  were  laid  before  the 
world  in  their  naked  deformity  by  newspaper  correspondents, 
chiefly  of  the  United  States  and  Great  Britain,  and  corrobo- 
rated by  consuls  from  each  of  the  six  provinces,  as  well  as  by 
Consul-general  Fitzhugh  Lee,  and  by  several  of  our  own  con- 
gressmen and  senators  who  visited  the  island.  So  the  cup  of 
Spain's  iniquity  was  full  to  the  brim  prior  to  the  Maine  horror ; 
and  when  that  occurred  both  Houses  of  Congress  were  so  moved 
that  they  were  unanimous  in  their  resolution  empowering  the 
President  to  declare  war.  It  was  not  a  case  of  emotional  action 
on  the  part  of  either  Congress  or  the  President,  but  the  united 
expression  of  a  humane  indignation  and  an  intelligent  purpose 
resulting  from  a  careful  consideration  of  the  facts,  that  purpose 
having  the  approval  of  nearly  the  whole  people  of  the  United 
States  and  subsequently  of  the  world  at  large.  The  people 
urged  Congress  and  Congress  urged  the  President,  who,  in  the 
interest  of  peace,  struggled  against  the  inevitable  almost  to  the 
very  point  of  inciting  popular  displeasure  and  distrust. 

The  mind  of  the  President  was  made  up  on  the  subject 
shortly  after  he  received  the  report  of  the  Court  of  Inquiry, 
and  this,  together  with  the  consular  reports  from  Cuba,  con- 
vinced him  that  there  was  but  one  way  of  settling  the  trouble 
between  Spain  and  the  people  of  the  island.  He  sent  a  mes- 
sage to  Congress  April  n,  1898,  in  which  he  stated  that  armed 
intervention  in  Cuba  by  the  United  States  was  the  only  means 
that  could  be  devised,  in  view  of  the  barbarities  practiced  on 
the  people  of  the  island  by  Spanish  authority. 

Congress  immediately  drew  up  a  set  of  joint  resolutions  stat- 


286         THE   WALL   STREET  POINT   OF   VIEW. 

ing  that  Cuba  was,  and  should  be,  free,  demanding  that  the 
government  of  Spain  relinquish  its  authority  in  the  island,  and 
withdraw  its  land  and  naval  forces  from  Cuba  and  Cuban 
waters,  and  directing  the  President  of  the  United  States  to  use 
the  land  and  naval  forces  of  the  United  States  to  carry  these 
resolutions  into  effect. 

The  President  signed  these  resolutions,  April  20,  1898,  and 
immediately  sent  an  ultimatum  to  Spain,  quoting  the  resolutions 
and  requesting  her  to  withdraw  her  army  and  navy  by  noon  on 
April  23.  The  Spanish  government  did  not  await  the  ceremony 
of  receiving  the  ultimatum  at  the  hands  of  Minister  Woodford, 
but  immediately  sent  that  gentleman  his  passports  without  the 
usual  Castilian  politeness  and  its  dilatory  ceremony,  thus  taking 
the  initiative  in  the  declaration  of  war  prior  to  the  time  set  by 
President  McKinley's  ultimatum.  Minister  Woodford  notified 
all  our  consuls  in  Spain,  and  immediately  set  out  himself  for 
Paris,  after  handing  over  his  official  business  to  the  British 
minister  at  Madrid. 

President  McKinley  then  issued  a  proclamation  dated  April 
22,  1898,  in  pursuance  of  the  joint  resolution  of  Congress,  to 
the  effect  that  a  blockade  be  established  and  maintained  on  the 
entire  northern  coast  of  Cuba  in  accordance  with  the  laws  of 
the  United  States  and  the  law  of  nations  applicable  to  such 
cases.  This  action  was  approved  by  Congress,  and  a  call  for 
125,000  volunteers  was  issued,  and  immediately  responded  to 
with  enthusiasm  from  all  parts  of  the  country,  showing  that  the 
response  for  a  million  men  would  have  been  made  with  as 
great  alacrity. 

On  the  very  morning  of  the  day  of  this  last  proclamation 
the  first  gun  was  fired  by  our  navy,  from  the  Nashville  which 
captured  the  first  Spanish  prize,  the  steamship  Buena  Ventura. 

On  April  25,  Congress,  at  the  instance  of  the  President,  passed 
a  bill  declaring  that  "  war  exists  between  the  United  States  of 
America  and  the  kingdom  of  Spain,"  and  moreover  that  war 
had  existed  since  April  21,  the  date  on  which  Minister  Wood- 
ford  received  his  passports.  The  bill  further  provided  "  That 
the  President  of  the  United  States  be,  and  he  hereby  is,  directed 


OUR   NATION'S   NEW   DEPARTURE.  287 

and  empowered  to  use  the  entire  land  and  naval  forces  of  the 
United  States,  and  to  call  into  the  actual  service  of  the  United 
States  the  militia  of  the  several  states  to  such  an  extent  as  may 
be  necessary  to  carry  this  act  into  effect." 

From  these  considerations  it  would  seem  that  if  ever  there 
was  a  justifiable  cause  for  war,  our  recent  troubles  with  Spain 
most  assuredly  come  under  that  head. 

The  war  had  virtually  begun  as  above  described,  but  thus  far 
it  was  slow  until  that  memorable  May  morning  in  Manila  Bay 
when  the  greatest  surprise  and  the  most  wonderful  victory  in 
the  history  of  naval  warfare  took  place  :  the  quick  and  com- 
plete destruction  of  the  Spanish  squadron  of  eleven  ships 
under  the  command  of  Admiral  Montojos,  by  Commodore 
Dewey's  squadron,  without  the  loss  of  a  single  American  life 
or  ship. 

This  sketch  of  events  leading  to  the  recent  war  is  intended 
simply  as  a  retrospect  of  the  great  work  accomplished  in  so 
short  a  time,  with  the  view  of  obtaining  a  more  correct  appre- 
ciation of  the  destiny  of  the  United  States  consequent  upon  its 
new  departure.  Never  were  114  days  filled  with  events 
more  momentous  in  their  consequence ;  not  even  the  famous 
"  one  hundred  days  "  beginning  with  the  flight  of  Napoleon 
from  Elba  and  ending  with  Waterloo.  The  destruction  of 
Cervera's  fleet  off  Santiago  was  Spain's  Waterloo. 

Some  persons  are  anxious  to  know  how  we  are  to  manage  the 
new  possessions  and  discharge  the  new  obligations  forced  upon 
us.  Those  who  can  conquer  territories  usually  know  how  to 
govern  them,  though  Spain  has  proved  a  glaring  exception  to 
this  rule. 

The  best  opinion  that  I  have  seen  on  the  subject  emanated 
from  a  Spanish  source  before  the  treaty  of  peace  was  signed, 
and  is  contained  in  the  following  article  :  — 

"Those  who  say  that  colonies  are  nothing  but  encumbrances, 
and  that  the  loss  of  Cuba  and  Puerto  Rico  will  prove  beneficial  to 
our  trade  and  to  our  merchant  navy ;  those  who  believe  that  distant 
territories  merely  serve  for  having  our  banner  there,  and  as  an  out- 
let for  the  refuse  of  our  political  parties,  are  now  deeply  concerned 


288          THE  WALL   STREET   POINT   OF  VIEW. 

over  which  it  would  be  best  for  us  to  retain,  if  possible,  Puerto  Rico 
or  the  Philippines. 

"  Neither  the  one  nor  the  others. 

"  It  is  true  that  Puerto  Rico,  in  due  honor  to  the  lamb  on  her 
shield,  has  always  remained  loyal  to  Spain,  but  Puerto  Rican  fealty 
is  not  much  to  be  relied  upon  since  the  day  when  Senor  Moret  took 
there  the  spirit  of  discord.  As  to  the  Philippines,  the  magnitude 
of  the  affair  is  evident  to  all.  An  army  of  from  50,000  to  60,000 
men  and  ample  political  reforms  would  be  indispensable  to  conquer 
the  island  of  Luzon.  Have  we  got  the  means  to  go  into  this  colos- 
sal undertaking?  Do  we  feel  inclined  to  face  it?  One  of  the  morn- 
ing newspapers  says  that  friends  of  the  government  have  expressed 
the  opinion  that  the  sending  of  these  reinforcements  would  be  very 
difficult,  not  to  say  impossible. 

"  It  would  certainly  be  difficult ;  by  no  means  impossible.  But 
before  throwing  upon  Spain  the  weight  of  such  an  enormous  under- 
taking, we  must  seriously  consider  whether  we  are  ready  to  reform 
our  methods  as  regards  colonization.  If  so,  let  us  keep  the  Philip- 
pines, for  there  are  in  those  islands  enough  riches  to  compensate 
for  all  our  losses.  If  not,  let  us  not  insist  upon  retaining  them, 
because  they  would  be  an  evil  rather  than  a  boon  to  the  nation. 

"  It  would  be  a  great  thing  for  us  if  somebody  were  willing  to 
take  the  islands  and  assume  our  colonial  and  war  debts.  This 
would,  perhaps,  be  the  only  way  to  save  interests  that  are  now 
imperiled. 

"  There  is  considerable  talk  concerning  these  debts.  It  is  said 
that  the  United  States  will  compel  us  to  pay  them,  and  that  an  inter- 
national conflict  will  thus  be  provoked.  In  the  first  place,  the  United 
States  will  not  compel  us  to  pay  anything,  because  this  is  none  of 
their  business.  They  will  merely  declare  that  they  will  not  pay  or 
recognize  them,  and  that  will  be  all.  In  the  second  place,  we  ought 
to  consider  that  the  payment  of  those  debts  would  have  devolved 
upon  us  even  in  case  autonomy  had  been  a  success,  and  that  war 
with  the  United  States  had  been  averted. 

"  The  Cubans,  and  also  the  Spanish  residents  of  Cuba,  never 
agreed  to  pay  more  than  one  fifth  of  the  debt.  The  remaining 
four  fifths  was  to  be  saddled  upon  the  nation. 

"The  Cubans  reasoned  with  perfect  logic.  'This  debt,1  they 
said,  'was  contracted  not  in  order  to  build  bridges  or  highways, 
or  railroads,  but  forcibly  to  oppose  our  claims.  If  the  justice  of 
these  claims  was  fully  recognized  by  the  autonomy  decree,  how  are 
we  to  be  compelled  to  pay  the  debt  ? ' 


OUR   NATION'S   NEW   DEPARTURE.  289 

"Thus  peace  will  not  cost  us  more  than  that  fifth  part  of  the  debt 
which  the  Cuban  autonomists  had  consented  to  pay,  and  which  the 
United  States  are  now  said  to  reject. 

"We  refuse  to  consider  the  possibility  that  the  debt  question 
may  give  rise  to  an  international  conflict  in  our  favor.  The  Cuban 
and  Philippine  debts  are  guaranteed  by  Spain's  Treasury,  and  all 
that  the  foreign  holders  of  said  debts  have  to  do  is  to  come  to  us 
in  order  to  be  paid,  when  the  Cubans  refuse  to  pay  them. 

"  Let  us  accustom  ourselves  to  see  things  as  they  really  are,  for 
our  habit  of  fancying  about  them  has  cost  us  too  dear." 

Although  there  is  a  great  variety  of  opinion  regarding  our 
duty  and  obligations  in  the  matter  of  the  Philippines,  the  con- 
census of  the  best  opinions  seems  to  be  that  we  have  virtually 
assumed  obligations  of  which  we  cannot  honorably  divest  our- 
selves, and.  that  we  are  responsible  for  giving  the  islanders  a 
settled  form  of  government. 

To  have  handed  the  government  of  these  islands  back  to 
Spain  was,  from  either  a  humanitarian  or  political  point  of 
view,  not  to  be  thought  of  ;  while  according  to  the  opinions 
of  eminent  European  statesmen,  to  have  turned  them  over  to 
a  European  power  for  cash  considerations  would  much  resem- 
ble selling  them  into  slavery,  and  at  the  same  time  furnish  the 
possible  cause  of  a  European  war  over  the  direction  of  what  we 
had  been  frightened  out  of  accepting  by  the  bugaboo  of  impe- 
rialism, so-called.  We  are  not,  and  will  not  become,  an  impe- 
rialistic nation.  The  idea  of  democracy  is  too  firmly  intrenched 
in  the  minds  of  the  people  ever  to  allow  a  departure  from  the 
Constitution.  But  we  are  expansionists,  in  the  very  best  sense 
of  that  word.  The  name  of  the  Great  Republic  is  synonymous 
with  the  expansion  of  learning,  commerce,  wealth,  and  all  else 
that  make  for  the  betterment  of  the  human  race. 

Under  the  new  responsibilities  that  have  devolved  upon  us, 
through  the  acquisition  of  the  Philippines,  public  opinion  is 
steadied,  with  a  tendency  toward  the  relegation  of  partisan 
prejudices  to  the  rear.  The  aims  and  intentions  of  the  govern- 
ment in  regard  to  these  islands,  so  wisely  set  forth  by  President 
McKinley,  leave  no  just  cause  for  cavil. 
u 


290         THE   WALL   STREET   POINT   OF   VIEW. 

Through  the  unforeseen  results  of  war,  the  task  of  conferring 
the  benefits  of  civilization  upon  several  millions  of  human 
beings  is  laid,  perhaps  most  fittingly,  upon  the  most  progressive 
nation.  We  shall  not  shrink  from  it,  but,  as  a  preliminary, 
order  must  prevail. 

Beyond  this  aspect,  the  strategic  value  of  our  new  posses- 
sions is  very  great.  They  form  the  natural  outer  bulwarks  of 
defense,  and  are  powerful  for  the  maintenance  of  the  dignity 
of  our  position  among  the  nations  of  the  earth.  From  a  com- 
mercial point  of  view,  these  islands  are  vastly  important.  As 
New  York  is  the  gateway  to  our  continent,  so  the  Philippines 
form  the  natural  gateway  to  Asia,  with  its  800,000,000  of  peo- 
ple. They  are  commercially  strategic  for  warehousing  purposes. 

Recent  events  have  clearly  demonstrated  the  insecurity  of 
the  warehousing  of  materials  upon  the  mainland  of  China, 
where  they  are  at  the  mercy  of  irresponsible  mobs.  But  our 
merchants  are  enabled  to  store  their  surplus  upon  these  islands, 
free  from  the  dangers  of  revolution  or  pillaging,  and  ready  at  a 
moment's  notice  to  be  sent  forward  to  supply  the  enormous 
demands  of  these  myriads  of  Asiatics.  The  immense  advan- 
tages of  our  position  in  this  most  important  regard,  together 
with  our  freedom  from  territorial  entanglement  upon  the  conti- 
nent itself,  place  in  our  hands  a  commercial  power  hard  to 
overestimate. 


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